miyahuna study tours (2007-2008)

May 2009 The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

ORGANIZATIONAL LEARNING OPPORTUNITIES STUDY TOURS CONDUCTED FOR MIYAHUNA IN 2007 - 2008 Colombia, United States of America and Spain Contract No. AFP-I-00-03-00035-00, Task Order No. 539 SEGURA / IP3 Partners LLC

The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

Acronyms

AGBAR Aguas de Barcelona AMR Advanced Meter Reading ASERCO AGBAR Servicios Compartidos AWC Aqaba Water Company COP Chief of Party SEGURA/IP3 DCWASA District of Columbia Water and Sewer Authority EMASESA Water Company of Seville EMIVASA Water Company of Valencia GWh Giga watts per hour IT Information Technology ITA Instituto de Tecnología del Agua (Water Technology Institute) JD Jordanian Dinar JVA Jordan Valley Authority LBWD Long Beach Water Department MIYAHUNA Jordan Water Company MW Mega watts MWDSC Metropolitan Water District of Southern California MWI Ministry of Water and Irrigation NRW Non-revenue Water PRV Pressure-reducing Valve SWP State Water Project UFW Unaccounted for Water O&M Operations and Maintenance USA United States of America USAID United States Agency for International Development € Euro $ United States Dollar WAJ Water Authority of Jordan

Units Km2 Square kilometer Kw-h Kilowatt-hour lcd Liters per capita per day MCM Million cubic meters MCM/year Million cubic meters per year

Currency equivalents (2008) 1 € = 1.31 $ dollars 1 JD = 1.43 $ dollars

ORGANIZATIONAL LEARNING OPPORTUNITIES - STUDY TOURS FOR MIYAHUNA IN 2007-2008

2

CONTENTS INTRODUCTION ..............................................................................................................2 WATER PRICING..……………………………………………………………………….4 MANAGING WATER SCARCITY………………………………...……......................13 CUSTOMER SERVICES………………………………...……......................................38 CORPORATE GOVERNANCE ….………….………………..………...…...................46 INFORMATION TECHNOLOGY ...……………...........................................................56 STRATEGIC PLANNING …………………………………………...……………........69

CORPORATE CULTURE ………………………………………………….…………...75 TRANSIENT MANAGEMENT ………………………………………………....... ......83 BULK WATER MANAGEMENT…………………….………………………………...90 OTHER INNOVATIONS …………………………………………………………….....94

ANNEX – STUDY TOURS DETAILS………………………………………...106


3

INTRODUCTION

Making MIYAHUNA’s vision, mission, and values real and not empty words on paper is a major challenge for everybody in the company -- the management committee, senior and middle level management, and all employees. For the management committee and senior management, the challenge is to create conditions that make productive change a natural way of life in MIYAHUNA. This way of thinking is aptly expressed by Rosabeth Moss Kanter when she says that all managers have two jobs – “handling today’s issues and getting ready for the future.”1 In line with the above thinking, this report was prepared by MIYAHUNA’s management in cooperation with SEGURA/IP3 to assist management and employees at all levels in getting ready for the future by identifying, considering, and implementing opportunities for improving the quality and efficiency of the services. The report seeks also to encourage the exchange of ideas with staff of sector government agencies and other water companies. The report consolidates the results of study tours conducted in 2007 and 2008 as part of the technical assistance provided to MIYAHUNA by USAID through SEGURA/IP3. The study tours were to Colombia, Spain, and the United States2. The participants in the tours were members of the management committee and directors. The observations during the study tours reflected in this report should provide an opportunity for organizational learning aiming at developing MIYAHUNA into a change-adept rather than a top-down bureaucratic organization. In the words of Moss Kanter, a change-adept organization anticipates, creates, and responds effectively to change while the top-down bureaucratic organization lacks those characteristics. The expectation of the management committee and senior management is then that MIYAHUNA’s managers and employees at all levels learn from the lessons and experiences included in the report and use them for developing and acting on an agenda for continuous change and improvement, and for identifying and implementing specific projects. The Super Client Program, the NRW Reduction Program and the Tariff Review Program under implementation at MIYAHUNA are good examples of the potential of the ideas in the report. The management committee and senior management are determined to continue searching for opportunities for organizational learning. To make this approach effective, management expects the collaboration and direct involvement of all MIYAHUNA’s employees without consideration of ranking. Initiatives and suggestions from everybody are welcome.

1 Moss Kanter Rosabeth. On the Frontiers of Management. Harvard business review, 1997, page, 3. 2 Detailed reports for each visit were prepared including analysis and recommendations from tour participants.


4

WATER PRICING


5

TARIFF POLICY: THE EXPERIENCE OF COLOMBIA

Cost recovery and tariff policy The Colombian government and sector authorities have made sustained efforts since the early 1990s to raise water and sanitation tariffs closer to cost recovery levels. Those efforts have been instrumental in lifting the average domestic water and sewerage tariff from USD 0.33 per m3 in 1990 to USD 0.78 in 2001. The tariffs vary from municipality to municipality taking into account the particular characteristics of each system, particularly their cost levels. The impact of the tariff increases in low-income groups has been alleviated by a cross-subsidy from some group of consumers to other groups. This cross-subsidy scheme dates back to the 1960’s and was subsequently included in the 1991 Constitution and, more recently, developed in more detail by law 142 of 1994. The cross subsidy system is part of a national tariff framework applicable to the electricity, telephone, and water and sanitation services. The system considers a six-level social stratification of all customers throughout the country, according to the physical quality of the housing and general amenities. The classification is undertaken by local authorities in line with broad national guidelines. Households in the upper two strata (strata 5 and 6) have surcharges added to the cost of the services provided. Strata 4 pay the cost of the services, while those consumers in the lowest strata (strata 1 through 3) receive subsidies (discounts over the cost of the services). The funds generated by the surcharge to strata 5 and 6 and to non-residential consumers in each company are applied to cover the cost of the subsidies to strata 1 through 3 in the same company. If the surcharges exceed the subsidies, the difference goes to a “Solidarity Fund” in the municipality. On the contrary, if the surcharges are insufficient to cover the subsidies, the municipal government should cover the difference with resources from the “Solidarity Fund” or from its own source of revenue. The surcharges and the discounts are explicitly reported on the customer’s bills.

Two-Step tariff determination Step 1: Establishment of referential cost by the regulatory commission The water companies prepare estimates of the full costs incurred to deliver the services (Referential Cost), following a methodology defined by the Regulatory Commission. The methodology includes a detailed description of acceptable costs in each cost category and also provides for “efficiency cost adjustments” based on statistical cost analysis carried out by the Commission. The typical monthly bill (average bill) has a cost structure that shows investments as the predominant component, followed by operation and maintenance cost, administrative cost and, environmental charge. See graph below.


6

Step 2: Establishment of final tariffs by the municipality or the district The final tariffs are determined by the company in accordance with the Referential Cost as approved by the Regulatory Commission.

Tariff components

Fix Component ($/subscriber): It includes the total administrative costs divided by the number of customers. This amount is denominated the average administrative cost (CMA) and it is included as a fix charge in the water bill.

Variable Component ($/m3): Is based on the volumetric consumption and is the result of the addition of:

1. Average operation and maintenance cost 2. Average Environmental Tax cost 3. Average cost of investments Referential cost formula

Ref.Costw = CMAw + Billed m3 * (CMOw + CMIw+ CMT)

Ref.Costww = CMAw w + Billed m3 * (CMOw w + CMIww+ CMT)

Typical Monthly Bill Components(14.34 cm/month)

Average investment cost

60%

Average Operation &Maintenance

Cost23%

Average Administrative Cost

Average Environmental Charge


7

Where:

CMA: Average administrative cost CMO: Average operation and maintenance cost CMI: Average investment cost CMT: Environmental tax

Tariff calculation by Strata

Where: • CMAref : referential administrative cost • CMLPref : the variable operation and maintenance cost • i: tariff Strata (from 1 to 6, being 4 the referential cost) • fi: percentage of subsidy or contribution of the referential cost

Solidarity contributions (Subsidies)

According to Decree 57 of 2006, categories 5 and 6 of subscribers and the commercial and industrial categories have a tariff with the following contributions to the average tariff of the referential cost:

Contributions: • Strata 4: 0% • Strata 5: 50% • Strata 6: 60% • Commercial: 50% • Industrial: 30%

The main purpose of the tariff regulation as defined in decrees 57 and 1013 is to achieve equilibrium between subsidies and contributions from other subscribers and the external funds provided by the municipality or central government.

Tariffi = CMAref * fi + CMLPref * Billed m3 * fi

Tariff is indexed by inflation every year

SUBSIDIES

STRATA1, 2 Y 3

CONTRIBUTION

STRATA 5 AND 6 COMMERCIAL,

INDUSTRIAL

CONTRIB.STATE AND

MUNICIPALITY


8

Subsidies

The tariff as percentage of the referential cost is presented in the table below for the city of Bogota for the month of September 2007:

Typical TariffBill for As % of Aug. 07 Refferential

JD (equiv.) CostStrata 1 4.7 29%Strata 2 9.8 61%Strata 3 14.4 91%Strata 4 15.9 100%Strata 5 30.4 191%Strata 6 37.9 238%

The percentage contribution from each category compared to the percentage variation of the typical bill (average) per category as depicted in the last table is different because the different water level consumption between categories. For example in the case of Bogota in September 2007, the customers in strata 5 contributed 50% of the surcharges of contribution to finance the subsidy, but due to the higher level of consumption, their average bills end up being 91% more than the category 4. The financing of the cost of services for strata 1, 2 and 3 is presented in the following graph.

PAGA USUARIO30%

PAGA CIUDAD10%

PAGAN USUARIOS

APORTANTES60%

Estrato 1Strata 1

Payment by Other Users

60%

Payment by User

30%

Payment by the city10%

Payment by User in Strata

30%

Payments from the Solidarity Fund

10%

PAGA USUARIO60%

PAGA CIUDAD6%

PAGAN USUARIOS

APORTANTES34%

Estrato 2Strata 2

Payment by Other Users

34%

Payment by User

60%

Payment by the City6%

Payment by User in Strata

60%

Payment from the Solidarity Fund

6%

PAGA USUARIO92%

PAGA CIUDAD1%

PAGAN USUARIOS

APORTANTES7%

Estrato 3Strata 3Payment by Other Users

7%

Payment by User

92%

Payment by the city1%

Payment by Users in Strata

92%

Payment from the Solidarity Fund

1%


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TARIFFS: THE EXPERIENCE OF EUROPE AND SEVILLE - SPAIN The delegation listened to various presentations related to tariffs:

• The tariff adjustment process in the European Union

• Seville Water Company (EMASESA) tariff adjustment program

European Union Tariff Experience: Water Framework Directive (FWD) The ITA made a presentation about a directive approved by the European Parliament in 2000 establishing the water policy framework (Water Framework Directive- FWD) to be applied by the member countries. The framework established a 9-year period for all states in the Union to adopt it. The FWD also established deadlines for the member states to report to the European Commission on progress made in its implementation. The principles for water costing are presented in the graph below.

Principles for Water Costing

Implementing the above principles was a significant challenge, as most European countries were far from applying them. Greece, Portugal, Ireland and Spain were the countries that needed the major adjustments. The countries requiring comparatively less adjustment were United Kingdom, France and Germany. See graph below.

FWD Directive The member states commit themselves to adopt no later than 2010 a policy of water prices that will provide adequate incentives for an efficient use of water resources that contributes to achieving the environmental objectives of the present directive.


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Water Tariffs in European Countries before the Implementation of FWD

Water Tariff in 2000 Water Tariff needed to recover full cost

Greece Ireland Spain France U.K. Germany Denmark

€/m³

Portugal

Some European cities had experienced steep adjustments in tariff rates even before the directive. Copenhagen, for example, increased tariffs 20 times between 1972 and 1992 and, then, in the ten years between 1992 and 2002 increased tariffs again by 25% or 2% per year.

Copenhagen Water Tariff Evolution

Year

€/m³

Innovative Tariff System in Seville EMASESA implemented in 2006 an innovative tariff system for residential users. The new system replaced the progressive tariff block system implemented in 1995, which awarded a bonus to households with low consumption, and charged higher prices to households with higher consumption. The decision to change was due to EMASESA’s perception that the system had one major flaw, as large number of households with only one or two people benefited unfairly from the allowance for low consumption, and, conversely, a large number of families with a higher number of members were penalized with higher tariffs. After reviewing various options, EMASESA introduced in 2006 a tariff system for residential consumption that takes into account the number of inhabitants per household and provides bonuses to customers with consumption levels below 10 m³ per quarter per person


11

and penalties for those that consume more than 15 m³ per quarter per person. The rest of the clients are grouped in categories I and II. The system has been gradually developed since 2006 initially being some customers billed for per-capita consumption while others billed on the basis of household consumption. In 2009 all customers are billed on a per-capita base. The tariff system is based on EMASESA’s estimates of average members living in a residency. If a family has more members living in the house, it should notify it to the company so its consumption can be measured and thus be entitled to a bonus. The bonus is equivalent to 26% of the total bill. The tariff in process of implementation had the following stages: YEAR 2006: Block with bonus: less than 3.33 m³/person/month Block I: From 0 to 16m³/household/month Block II: More than 16 m³/household/month After new information showed that the average household had 2.4 people per household, a new estimate was obtained for 2008 decreasing the average household from 4 to 3. YEAR 2008: Block with bonus: less than 3.33 m³/person/month Block I: From 0 to 12 m³/household/month Block II: From 13 to 15 m³/household/month Block III: More than 15 m³/household/month For 2009, it is planned that the tariff will be calculated by person. If this information is not available, the limits of the blocks will be calculated based on 2.75 persons per household. YEAR 2009: Block with bonus: less than 3.33 m³/person/month Block I: From 0 to 4 m³/person/month Block II: From 4.1 to 5 m³/person/month Block III: More than 5 m³/person/month Non Residential Consumption The non-residential consumption has a single block tariff with incentives and penalties, as shown below:

Blocks I and II are calculated on the basis of 4 people per

household.

Blocks are calculated on the basis of 3 people per household.

Blocks are calculated per person.


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• Night consumption: a 39% bonus estimated on the base tariff for industry. • Irrigation: EMASESA estimates the level of “efficient water consumption”

according to the surface and the technologies available. Consumptions above EMASESA’s estimates are penalized with higher tariffs, and even with suspension of service.

• Contamination: customers are charged a penalty for contamination. EMASESA offers, however, assistance to remedy contamination problems.


13

MANAGING WATER SCARCITY


14

DEMAND MANAGEMENT: THE EXPERIENCE OF BOGOTA - COLOMBIA

Tariff policies based more on the cost of services than on political considerations, and water losses reduction programs carried out by service providers have had a significant impact on water consumption levels. The average consumption per connection in Bogota has had a significant reduction (from 31.5 m3 in 1993 to 14.9 meters in 2006) while maintaining a continuous service (24 hours a day and 7 days a week) to a growing number of customers (from 5.5 million in 1993 to 7.4 million in 2005). See graph below. The changes in consumption per connection have allowed EAAB to postpone substantial investments in water production, as shown in the graph below. The postponement of these investments significantly reduces the marginal cost of water and alleviates EAAB’s finances.

Consumption per Billed Customer

Consumption Index By Billed Customer(Billed Customer/Average users)/12


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The other cities have had similar experiences. Triple A, for example increased its number of customers by 75% between 1996 and 2007 while supplying less water to the system (the volume of water supplied declined from 16.5 to 15.0 million m3). See following graph. In addition to provide service to a growing number of customers, Triple A has been able to provide continuous service. The water supply service before Triple A was intermittent (3 to 4 days on average in the service area).

Water Supply - Demand Trend in Bogota

Year

Factors that reduced consumption of potable water

Law 373/97 – Rational use of waterIncrease of tariffs associated to Law 142 of 1994. Implementation of Non Revenue WaterProgram

Emergency in supply due to Chingaza crisis (tunnel collapse) 1997 Economic crisis since 1997

10,00

12,00

14,00

16,00

18,00

20,00

22,00

24,00

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Flow

(m3/

s)

22.0

16.5

Water supply

14.2 m3/s (2005)

Projection of demand before1997

Supply equal to demandprojected (2012)


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A similar case is observed in Cartagena where approximately 160,000 customers in 2007 are served with the same quantity of water supplied to 90,000 customers in 1999. From an approximate consumption of 152 m3/ person/ y to 83 m3/person/y.

13.0

14.0

15.0

16.0

17.0

18.0

1/1/

1996

7/1/

1996

1/1/

1997

7/1/

1997

1/1/

1998

7/1/

1998

1/1/

1999

7/1/

1999

1/1/

2000

7/1/

2000

1/1/

2001

7/1/

2001

1/1/

2002

7/1/

2002

1/1/

2003

7/1/

2003

1/1/

2004

7/1/

2004

1/1/

2005

7/1/

2005

1/1/

2006

7/1/

2006

1/1/

2007

7/1/

2007

140,000

160,000

180,000

200,000

220,000

240,000

260,000

280,000

300,000

320,000

340,000

Mill. M3 Water Subscribers

185.047Subscribers

324.545Subscribers

16,5 mil m3

15,0mil m3

BARRANQUILLABARRANQUILLAEVOLUTION OF SUBSCRIBERS VS. DELIVERED WATEREVOLUTION OF SUBSCRIBERS VS. DELIVERED WATER

1996 1996 -- 20072007

More Users With Less Water Distributed

Cartagena

60,000,000

62,000,000

64,000,000

66,000,000

68,000,000

70,000,000

72,000,000

74,000,000

76,000,000

78,000,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Agua dit r ibuida (M3 año) Abonados at endidosDistributed water Customers served

Cub

ic M

eter

/Yea

rS

ubscribers


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WATER DEMAND MANAGEMENT: THE EXPERIENCE OF SOUTHERN CALIFORNIA - UNITED STATES OF AMERICA California is suffering from an 8-year-old drought in the catchments of the Colorado River, with the lowest deliveries on record of bulk water from different sources. The levels of local precipitation are also at record lows. The allocation of exceptionally limited water resources among users is then a difficult task for water authorities. The difficulties are compounded by local environmental laws protecting certain fish species, thus reducing the withdrawal of water from rivers and lakes below historical levels.

In response to the water shortages in its service area, MWDSC has been implementing a number of programs aiming at achieving a more efficient water usage. The programs are concentrated on three main areas: 1) research and development, 2) incentives for water conservation, and 3) changes in consumer behavior. See graph below.

LegislationAdvertising & OutreachEducationCode CompliancePriceBMPs

Consumer Behavior

LegislationAdvertising & OutreachEducationCode CompliancePriceBMPs

Consumer Behavior

Consumer Behavior

Residential

Incentives

Residential

IncentivesIncentives

Innovative ConservationEnhanced ConservationAnnual Program ReviewOutside R & D

Research and Development

Innovative ConservationEnhanced ConservationAnnual Program ReviewOutside R & D

Research and DevelopmentResearch and Development

Water-Use Efficiency ProgramsWater-Use Efficiency Programs

CommercialWater RecyclingSeawater DesalinationGroundwater Recovery


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Some of the conservation programs implemented to achieve the results in the box above are outlined below. Water-saving programs These programs include; implementation of water-savings regulations, promotion of low-flow toilets and showerheads, high- efficiency clothes washers, water conservation gardens; educational programs; and more strict plumbing codes. The achievements of some of these programs are summarized below: Water-saving Regulations MWDSC and the partnering companies have enforced a number of regulations aimed at reducing water consumption. These regulations include the following:

1. Banning washing of driveways, sidewalks, parking areas, patios or other outdoor areas using a hose.

2. Prohibiting irrigation of gardens between 9:00 AM and 4:00 PM. 3. Prohibiting the operation of non-water conserving pre-rinse nozzle in food-

preparation establishments such as restaurants and cafeterias. 4. Banning watering of any area beyond saturation thus causing excessive runoff into

the streets. 5. Prohibiting operation of fountains and other water features that do not re-circulate

the water. 6. Banning washing vehicles with a hose.

The regulations require hotels and motels to provide customers with the option of not having the towels and linens laundered daily. This option must be prominently displayed in each bathroom and sleeping room, using clear and easily understood language. Rebate Programs MWDSC is increasingly using rebate programs to promote savings on water consumption. As residential water consumption is mainly used in irrigation of gardens and landscaping (in

High Efficiency Item Average Saving /Year

Toilet 10 m3

Washer 34 m3

Irrigation Controller 51m3

Since 1990, Metropolitan has invested $ 251 million in its conservation programs saving about 1,164 MCM of water,

equivalent to $0.22 per m3.


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many areas over 50% of total consumption), MWDSC puts strong emphasis on programs to reduce irrigation at residents’ premises as well as on the promotion of plants that require less water.

Water Usage and Rebate Programs

70% Outside the House30% Inside the House

Rebates offered for houses:- High efficiency toilet: $ 75-180- High efficiency clothes washer: $130

Rebates offered for gardens:- Synthetic turf: $ 1/sq meter- Rotating irrigation nozzles: $ 4- Weather based irrigation system: $ 0.15/sq meter

The rebates executed by most of the water departments in Southern California have restrictions such as: - Rebate is limited to available financial resources (companies allocate a limited budget

for each program) - Rebate is not available for new developments - Rebate requests are processed on a first-come first-served basis - Only one rebate per household - The equipment must be purchased new and installed before submitting application - New developments are not included in the program (they are held to stringent water

conservation standards from the beginning) - Subject to onsite installation verification - Based on approved list of items to be installed - Request must include the original receipt with the model and serial number - Form filled and signed by the beneficiary

WATER SAVINGS REWARD PROGRAM FOR NON RESIDENTIAL CUSTOMERS

$ 3.00 per every 4 cubic meter of water saved This program rewards companies or institutions that: - Install equipment that will capture, treat and reuse water that would

otherwise be discharged to the sewer. - Replace existing process equipment with more efficient resulting in

reduced water demand. - Upgrade with more efficient irrigation equipment such as rotating

nozzles, spray heads, valves, sensors, smart controllers, etc.


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Institutional Water Saving Programs MWDSC, together with its participating agencies, has been successfully promoting the reduction of water consumption in private and public institutions. Through incentives, training and awareness programs, many institutions have developed their own programs to save water. The incentives include payments for conservation efforts and results. Follow some examples of these programs.

Institutional Water Savings Programs

Institution/Agency Project Title Estimated

Savings/Year (In MCM)

San Diego County Water District Landscape Auditor Interns 1.4 Western Municipal Water District Smart Controller Irrigation Installation 1.1 Los Angeles Water Department Water broom Distribution 0.9 West Basin Municipal District Landscape Reform Program 0.6 Western Municipal District High Efficiency Toilet Installation 0.5 Total in 15 programs 10.5 The California Friendly Program

MWDSC started in early 2000 the “California Friendly Program”, which is a branding effort to make it easier for customers to identify which products, organizations, and programs make efficient use of water. This idea came as a follow-up to a poll indicating that respondents did not know the water needs of different plants. In addition, about 81% of respondents said they would purchase more drought-resistant plants if they were clearly labeled as such. The program is expanding its branding effort so that products, builders, businesses, gardeners and cities carry the California Friendly designation.

The California Friendly Landscape Program assembled a panel of experts to approve the official list of nearly 300 drought resistant plants; then partnered with Home Depot and 70 independent gardens that sell plants.


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Programs launched under the California Friendly brand are the following:

1. Outdoor Conservation Outreach Program (education and public outreach). 2. Marketing and advertisement (website, radio, TV and print). 3. Consumer research. 4. Landscape Program (marketing, outreach and incentives). 5. Home Certification Program (a partnership with builders to build water efficient

landscapes and devices).

Water brooms have rebates of $150. California Friendly houses use 30% less water. Under the California Friendly program, the Long Beach water utility has installed a demonstration site where visitors or customers can see and learn about plants and arrangements that can both save water and beautify the environment.


22

Long Beach Water Department “drought tolerant garden” demonstration site

Incentives for Research and Development MWDSC has a program to provide grants to universities for research and development of cost-effective water saving technologies that can be implemented in water stressed regions, locally or globally. The program has exceeded MWDSC’s expectations. Thus, the funding was increased from $ 120,000 in FY 2007 to $ 150,000 in FY 2008. Some of the results of the program are presented below: 1. University of Southern California: new showerhead with touch activated on/off switch. 2. University of California at Riverside: rooftop rainwater harvesting. 3. University of SC Long Beach: conservation by onsite recycling. 4. Pasadena City College: biofiltration of household gray water. The California Urban Water Conservation Council In addition to utilities, the California Urban Water Conservation Council (CUWCC), a very influential organization, benchmarks progress on water conservation by utilities and other entities, and also allocate funding to different programs related to water. The CUWCC was created to increase water-usage efficiency in the State, through partnerships among urban water agencies, public interest organizations, and private entities. The Council's main goal is to integrate urban water conservation “Best Management Practices” into the planning and management of California's water resources. The Council was created by nearly 100 urban water agencies and environmental groups that signed a Memorandum of Understanding in December, 1991. Since then, the Council has grown to 384 members. Those signing the MOU pledge to develop and implement fourteen comprehensive water conservation programs denominated “Best Management Practices". Once a year, the CUWCC publishes the names of institutions and their performance against these 14 best practices and awards grants to programs of the best performing agencies.


23

Long Beach Water utility believes that the results of the Council’s programs are mixed, and that the net result is difficult to evaluate. On the one hand, the Council has succeeded in promoting water conservation amongst all its members. On the other hand, the utility believes that the Council’s programs inhibit new ideas for water conservation in areas which are not included in the “Best Practices” list. The utility also believes that the staff-intensive preparation of the reports to evaluate compliance with the “Best Practices” list is a major effort for their organization, and that the system should be simplified and, perhaps, reduced to a single indicator that effectively measures the results of water conservation efforts of each utility. The Best Management Practices list is presented below.

California Urban Water Conservation Council Best Management Practices

1. Water survey programs for residential customers 2. Residential plumbing retrofit 3. System water audits, leak detection and repair 4. Metering for all new connections and retrofit of existing connections 5. Large landscape conservation programs and incentives 6. High-efficiency clothes-washing machine financial incentive programs 7. Public information programs 8. School education programs 9. Conservation programs for commercial, industrial, and institutional accounts 10. Wholesale agency assistance programs 11. Retail conservation pricing 12. Conservation coordinator designation 13. Water waste prohibition 14. Residential Ultra Low Flush Toilet replacement programs

American Leak Detection Franchise American Leak Detection (ALD) is a company founded 30 years ago in Palm Springs California, now turned into a franchise with presence in 8 countries. ALD specializes in accurate, non-destructive detection of all types of leaks, including hidden water and sewer leaks. The company identifies leaks in swimming pools and in concealed plumbing systems, using sophisticated electronic devices without bashing holes in walls or digging. The franchise is considered one of the top 25 Franchise High Performers in the USA by The Wall Street Journal. Also, for the seventh straight year, American Leak Detection was ranked #1 in its category by Entrepreneur Magazine.

.


24

ALD partners with associations and water companies to assist on water leak surveys, and water conservation programs. For example, in March 2008, it teamed with the California Rural Water Association to carry out educational programs in rural water districts. The company gives free training seminars throughout the state titled, "Introduction to Water Accountability and Leak Detection". The seminars are sponsored by the California Rural Water Association and the California Department of Water Resources.

ALD Opening Eye Statements: • A leak the size of a pinhead can waste

1.3 MCM of water per year, enough to fill 12,000 bathtubs to the overflow mark.

• A leaking toilet can use 340 m3 of water in 30 days.

• Approximately one in every 318 homes or buildings has a leak.


25

WATER LOSSES REDUCTION: THE EXPERIENCE OF BOGOTA -COLOMBIA

Program schedule The three companies visited have developed successful programs of water losses reduction during the past 7 to 18 years. An illustrative example is the program in Bogota, which started in 1989 with a non-revenue water study. The study was followed up by the establishment between 1992 and 2001 of four district zones covering the whole service area of EAAB. Then EAAB management contracted with three private companies the operation of the five zones.3 The bidding for the zones was completed during 2002 and 2003. So, by now, EAAB has a five-year experience with private operators in the service area.

Main steps for the implementation of the program The steps taken to reduce water losses are similar in the three companies, and include: Step1: Mapping of sectors and sub-sectors, flow measurement points, feeders, isolation of

sectors and districts, and pre-modeling of the distribution zone. Step 2: Field work including installation of valves and temporary/permanent closing of

sectors. Step 3: Measurement of flows and pressure points in specific places: identification of

consumption curves and minimum night flows per district. Step 4: Construction and calibration of mathematical models. Step 5: Actions to reduce losses, including:

• Commercial activities: - Identifying and regularizing illegal customers - Replacing faulty meters - Harmonizing billing cycles

• Technical: - Establishing macro-sectors and districts - Pressure control and bulk-water metering - Rehabilitating networks

Step 6: Implementation of hydraulic optimization works, including: pipe renewal and replacement, and installation of pressure-reducing stations.

Prioritization of tasks and areas The financial and economic benefits of water losses reduction programs within a city vary among hydraulic districts. This point is illustrated by the case of Bogota shown in the graph below, which shows the financial gains or losses results per m3 for 37 districts.

3 One company won the bid for two zones.


26

The cumulative result is positive, but there are districts where the cost of the program exceeds the financial benefits associated with the reduction of water losses. Likewise, the benefit-cost of different projects or activities varied substantially in the case of Bogota. See table below.

Benefit-Cost Analysis of Projects or Activities Bogota

PROJECTS Litters/Sec Benefit/Cost

Connections 55 4.5 Massive fraud 227 2.3 Meters 185 3.1 Network Repair 710 12.0 Pressure reduc. valves 82 2.2 Others 10 1.1 TOTAL 1,269 3.2

As seen in the table above, the network repair and rehabilitation has had the highest benefit cost ratio in Bogota. It has been followed by the repair of leaks at the connection point and the meter repairs. The average ratio of benefit to cost has been very high (3.2). EAAB’s information system includes a breakdown of the technical and commercial losses by sub-district (see Annex 1), providing a powerful tool to help in the design and the strategy for the implementation of the water losses reduction program.

Pressure Reduction Valves

During a period of two years between 2003 and 2005, Bogota installed pressure reducing valves in most districts, achieving substantial results as shown in the graphic below. As it is

0106

0713

1415

1720

2122

2324

2526

3031

3233

3435

3637

Total

($1,500)

($1,000)

($500)

$0

$500

$1,000

$1,500

Sectores

P y G $ por Sector por Mt3Gains or Losses per M3 Saved

Districts

$ C

ol.


27

known excessive pressures are an important factor explaining water losses. The benefit-cost ratios of the investments in pressure reduction were high as shown in the table showing the benefit-cost of different projects and activities.

The graph above shows how water losses are reduced with pressure control measures implemented in the city of Bogota.

The formulation of hydraulic optimization works including the renovation of the areas, the reinforcement of pipes and the implementation of pressure reducing stations produced important results that reduced the losses.

Comportamiento de las pérdidas

Presión Caudal macromedición Caudal micromedición

Período de OperaciónAlta Media Baja

Cau

dal [

L/s]

100

90

80

70

60

50

40

30

20

10

0

Presión [m]

45

40

35

30

25

20

15

10

5

0

47.24 m

42.14 m

32.95 m

90.28

74.1366.74

40.44 42.54 41.47

F.P. 55.21% F.P. 42.62% F.P. 37.86%

Pressure Control and Reduction of Losses

Pressure Bulk Meter Flow Customer Meter Flow

Losses Behavior

High Middle Low

Flow

(l/s

)

Pressure (m

)

Period of Operation

NRW 55.21% NRW 42.62% NRW 37.86%

Pressure map WITHOUT works of hydraulic optimization in Bogota

Reinforcements

Renovation Regulation Stations

Pressure map WITH works of hydraulic optimization in Bogota


28

During a period of two years between 2003 and 2005, Bogota city covered most of their districts with pressure reducing valves contributing significantly to the reduction of losses.

Technology

During the visit the georadar equipment was identified to detect illegal connections. The experience in Barranquilla shows that when customers see this equipment in action they are more willing to declare their illegal connections and negotiate with the company.

Service with PRV 2003 Service with PRV 2005

GEORADAR

(Noggin)


29

Reduction in water losses

EAAB has achieved substantial reductions in the volume of water losses since 1995 until now. This is shown in the table below which represents both the absolute volume of water losses and the water losses measured in m3 per connection (user). The latter index is known as the “Water Losses per User Index” (IPUF in Spanish).. The above table illustrates both EAAB’s substantial accomplishments in reducing water losses (from 207 million m3 in 1995 to 161 million m3 in 2005) and the failure of the traditional indicator of non-revenue water (water losses as a percentage of production) to reflect these accomplishments, as the non revenue water index remained virtually unchanged at around 36%. This failure is the consequence of a weakness of the traditional non-revenue indicator in an environment of contracting water demand and production. In fact, it is even likely that in this type of environment, the unaccounted-for or non-revenue water index as a percentage of total water production increases even though the volume of water losses decrease in absolute terms, as was EAAB’s case.

The graph shows how this progress has been achieved over the past 13 years since 1993 with a significant achievement during four years during 1994 and 1997 and then stable progress during the last 9 years.

Water Losses Index per User (IPUF) Bogota, 1993-2005

(Non-billed volume/average number of customers)/12

M3/

Mon

th

NRW Vs. Losses Per Customer

Better Indicator

IPUFm3 losses/ user/month

1995 567 Mm3 207 Mm3 17.2 36.5%2002 456 Mm3 165 Mm3 10.6 36.2%2005 448 Mm3 161 Mm3 8.8 35.9%

Reduction 21% 22% 49% 0.6%

NRWYear Volume Supplied

Volume Lost


30

WATER SAVING PROGRAMS: THE EXPERIENCE OF SEVILLE -SPAIN EMASESA’s efforts to reduce water losses from the water source, up to the metering and distribution to customers were of particular interest for the Jordanian delegation. The results of these efforts between 1997 and 2007 show a reduction of total water losses from 26.3% to 14.8%. See table below.

EMASESA

Ten-year Improvements in Hydraulic Efficiency

ANNUAL EXECUTED

1997 2007

Losses MMC % MMC %

Total Losses 38.96 26.3% 17.75 14.8% Losses from the source up to the treatment plant 3.37 2.5% 1.06 0.9%

Losses in Treatment 2.95 2.1% 0.11 0.1%

Losses in Distribution 32.64 21.7% 16.58 13.8%

Efficiency

Hydraulic Return in Collection 97.5% 98.3%

Hydraulic Return in Treatment 91.9% 99.9%

Hydraulic Return in Distribution 67.0% 76.5%

From the Source to the Treatment Plant The implementation of the water saving program helped to reduce from 2.5% to 0.9% the losses from the water source to the treatment plant. This improvement is the outcome of actions like the improvement of the raw water pipe illustrated below.


31

Treatment Plants The reduction of water losses in the treatment plants from 2.1% to 0.1% was achieved through investments in upgrading water recovery systems, filters, treatment lines, and control systems.

Distribution The reduction in water losses in the distribution system from 21.7% to 13.8% was the result of EMASESA’s most intensive efforts in the distribution network through actions in the following areas:

• Expanding and improving measurement and control of water flows. • Establishing a continuous tracking of unaccounted for water (UFW) values. • Establishing districts and introducing systematic leakage control. • Renovating networks.

Improvement of the raw water pipe • Repairs Plan for the Minilla canal. • Interconnection works with other

systems for the exchange of resources.

Improvements in Water Treatment • Introduction of new treatments which

guarantee quality in adverse situations: ozone, activated carbon.

• Water tightness of the principal reservoirs. • Recovery systems of processed water.


32

Measurement of Flows

Continuous Tracking of UFW EMASESA has established an integrated control of subsystems covering water treatment, transport and distribution, equipped with meters that continuously report to a central control room. Establishment of Districts to Reduce Losses EMASESA has established water distribution districts to help in the management and implementation of systematic leakage control through observation of minimum night flows.

Network Rehabilitation EMASESA also carried out a major network rehabilitation program, which amounted to about 50% of the annual investment plan during 1997-2007. Through these investments, the company rehabilitated 40 to 50 KM per year or the equivalent to 1.5% to 2.0% of the total network per year.

Improvement of Flow Meters • Installing additional and more accurate flow meters. • Implementing a Main Control Center. • Implementing real time tracking and control. • Detecting problems in the primary and secondary network

due to breakages. • Improving repair response times.

Districts Establishment and Measurement

• EMASESA network is divided into 170 sectors, which represent a total network of 3.450 km. some of them are of a permanent nature and the rest are temporary.

• They are observed for period of 15 days at least once a year. • Control of sectors is carried out by means of measuring the

Minimum Night Flows. Their comparison with standards and if is necessary leakage detection by traditional methods: correlation, geophones, etc.

• Analysis of causes of leaks serves as a base to establish priorities in the network renovation plans.


33

DEMAND MANAGEMENT: THE EXPERIENCE OF SEVILLE - SPAIN As a result of a severe drought in 1992, EMASESA has implemented a number of water demand managent initiatives, which have resulted in significant reductions in water consumption (16% between 1992 and 2007), as shown in the table below.

EMASESA Water Consumption Profile in Seville

1992 1998 2004 2007 Consumption (MCM) 83.4 72.0 73.9 70.0 Breakdown by type of customer Residential 69% 74% 71% 70% Industrial 21% 22% 25% 27% Government 10% 4% 4% 3%

The initiatives have included the promotion of water-saving devices, grey water use, and consumption metering. Water Saving Devices After carrying out market studies and a careful testing of different water-saving devices, EMASESA implemented a communication campaign to promote the use of such devices in showers, toilets, and faucets. The customers reacted favourably to the campaign, as EMASESA and the Municipality provided valuable information to the customers by publishing the results of the testing of the devices produced by different manufacturers. The types of devices are illustrated below.

Three Types of Devices Promoted

MODELS AVAILABLE AT EMSASESA Econ-System Martí de 22 mm Econ-System Martí de 24 mm ECO-Grifo Monomando MULTISHOWER Antical ECO-Grifo Temporizado MULTISHOWER Antical

MODELS AVAILABLE AT EMSASESA ECO-Ducha 245-A MULTISHOWER Antical ECO-Ducha CADET MULTISHOWER Antical ECO-Ducha GALANT MULTISHOWER Antical ECO-Reductor Ducha MULTISHOWER Econ-System Martí

MODELS AVAILABLE AT EMSASESA Toilet discharger (IMPULS280A) System model KOMBIFIX System model DUOFIX System model GIS Model IMPULS280B Model IMPULS280C

Toilet FaucetShowers


34

The promotion of the water-saving devices included several steps: 1. First, EMASESA and the Municipality installed the devices in their offices. 2. Second, a municipal ordinance made it mandatory to install the devices in new homes or

refurbished buildings. It was also mandatory in public bathrooms. 3. Third, EMASESA and the municipality also entered into collaboration agreements with

the Hotel Association, the universities, the catering associations, and other confederation of businesses organizations to install such devices in their premises.

4. Fourth, EMASESA implemented a campaign denominated denominated “Saving 55 liters per person per day”, showing how the use of the saving-devices would result in these significant savings in water consumption with the correspondin reduction in the water bill.

The graph and the box below illustrate the campaign denominated “Saving 55 liters per person per day”.

Grey Water Use The Water Technology Institute presented the case of grey water use in toilets. The technology consists of collecting water used in faucets and showers and treating it through a a two-stage treatment process with 1) sand filter, and 2) sand filter and activated carbon. The recycled water is mixed with rain water and repumped to a roof storage to be circulated to the toilet system. New and old buildings can be equiped with two networks, one that collects the toilet water that is sent to the sewerage, and the the other that collects water from the rest of uses to be recycled for toilet use. The system also consists of a small treament facility, storage tanks and pumps. The Water Technology Institute estimates that with an adequate level of tariff

CAMPAIGN SAVING 55 LITERS PER PERSON PER DAY

TOILET SAVINGS: 21 LITERS Normal consumption per person per day: 10 Litters x 4 discharges = 40 liters Using saving devices per person per day: 10 liters x 1 discharge = 10 liters 3 liters x 3 discharges= 9 liters TOTAL=19 litters SHOWER SAVINGS: 20 LITERS Normal consumption per person per day: 60 liters Using saving devices per person per day: 40 liters FAUCET SAVINGS: 14 LITERS Normal consumption per person per day: 40 liters Using saving devices per person per day: 26 ltters


35

and according to the type of house, the cost of a grey water use system can be amortized in 2.5 to 5.0 years.

Grey Water Systemes and Savings of Water

TankTank of recycled water

Treatmentprocess

• Septic tank•Pump•1st: Sand filter•2nd: Activated carbon

Sewerage

Toilet sub network to sewerage

Faucet and shower sub network

to treatment and recycling

Rain water to recycling

Pump

Tank of recycled water for toilets

Savings of this system can be broken down in various categories as the graph above shows. The three main contributers to the savings are reuse of water from faucets (39%), toilets (22%) and showers (20%). PLAN 5: Individualization of Consumption Multifamily buildings, which accounted for 43% of residential water consumption, had a single meter, making it difficult for families to rationalize their consumption and thus reduce their water bills. EMASESA considered, then, that those buildings had a good potential for achieving substantial water savings, provided that the individual households had the right incentives. Based on this consideration, EMASESA implemented a plan denominated “Plan 5” to encourage customers to install individual household meters in multifamily buildings. Approximately 26.000 buildings participated in “Plan 5” during a five-year period. The results were highly satisfactory, as it resulted in water savings equivalent to 25% of the average water consumption per household before the plan. See graph below.


36

Water Savings Achievement with Plan 5

Plan 5 included five steps designed to align the interests of the customers, EMASESA and private contractors. The five steps were:

1. Organizing the community in each multifamily building and reaching agreement on the implementation of the plan. Once 60% of the households in a builiding favored the program, the community filled out a form and sent it to EMASESA or contacted directly one or more contractors assigned to the area.

2. Inviting bids for the work. Private contractors asigned to the area prepared quotes for the work, and the one with the best offer continued with the necessary paperwork.

3. Financing the works. EMASESA offered a financing plan for each building, including a subisidy for the installation of the meters. The financing plan offered by EMASESA is presented in a box below.

Meter Station in a Multifamily Building

Financing Offered by EMASESA Funding agency: Local bank Award: Automatic Amount: 100% of cost Period of repayment: Five years Prepayment: Allowed without penalty Payment: Deduction from the bill Interest rate: 8.5% Commission: 1.5%


37

4. Carrying out the works. The work started once the financing plan was agreed between the community and ASESA, and the contractor received the downpayment.

5. Paying the contractor. Once the contractor completed the work in a satisfactory manner, the customers gave their approval to the work and EMASESA or the customers payed the contractor.

Advantages for customers The advantages for customers included the following:

1. Potential savings in water bills, and access to bonus offered by EMAESA for low consumption.

2. Control of water consumption in the household and, thus, of the water bills. 3. Rehabilitation of water connections in building, improving pressures and reducing

leaks. 4. Accessing to subsidies provided by EMASESA including:

a. No subscription costs. b. No deposit or warranties. c. Incentives for connections (€ 93.76 per building) d. In case there was the need of a pumping system to increase pressure,

EMASESA increased the subsidy by € 36.06 per building e. In case there was the need to increase the intake points to two, the subsidy

wasl increased by € 57.70 per building. f. If there are additional legal steps to follow, the subsidy was increased by €

2.88 per building. 5. Access to preferential loans provided by a financial institution and payment in 5

years. 6. No individual paperwork; it was done by the contractor.

Advantages for EMASESA

1. Improving control of consumption per individual users, reducing the levels of demand of water by 25%.

2. Rehabilitating networks inside houses that have problems of leaks and pressure. 3. Updating the database of customers. 4. Installing high precision digital meters. 5. Facilitating the implementation of tariff systems based on individual

consumption. 6. Sharing with customers the costs of service improvements in the premises.


38

CUSTOMER SERVICES


39

CUSTOMER SERVICE: THE EXPERIENCE OF BARRANQUILLA COLOMBIA

Clear vision The three companies’ mission and vision statements put the customer at the forefront of the utilities success. The vision statement of the Triple A illustrates the point well: The three companies back up the mission statements with innovative programs to satisfy customers’ desires and needs. The paragraphs below outline some of the programs currently in place, which may be readily applicable to MIYAHUNA.

Bill collection strategy: Super Client Triple A implemented a successful program denominated Super Client aiming at providing better service to the customers and simultaneously improve bill collection. The program consisted in creating a status of Super Client for all those customers that pay promptly their bills in full (in the next week or so after receiving the bill). Clients included in this category enjoy benefits like the following:

• Faster attention (VIP line at customer centers) • Special bill (including, for example, vouchers for discounts in stores,

participation in raffles) • Special recognition in the call center of the company (116 line) • Special letter of recommendation after 12 months of status as Super Client

(These letters are highly valued by the banking and commercial systems as a way to obtain references for potential customers)

Directives:

1. We do not generate unconformity to our clients

2. If our client need us, they don't have to come to our offices

3. We will attend our clients nice and diligently

4. We add value to our best clients

Commercial Vision– Customer Management


40

The success of the Super Client program can be illustrated by the rapid membership growth since the program started in mid-2005. The number of clients that were included in this category has reached close to 30% of total clients. Triple A management objective is to reach 100% in the next 5 years.

The impact of this strategy on bill collection has been significant, as the number of customers up-to-date on its payments has increased from 41% at the beginning of the program to 61% eighteen months later. This is illustrated by the number of bills outstanding for no more than one month after the issuance of the bill. The graph below illustrates the number of customers with bills outstanding one month or less between June 05 and October 07.

Evolución mensual del Supercliente Triple A

37.025

64.755

60.945

67.529 67.73766.369

69.715

62.915

76.881

71.574

65.813

83.52486.176

88.819

38.743

93.12093.491

94.859

74.46874.285

69.420

64.48163.682

68.112

62.808

64.91363.216

60.943

50.368

30.000

40.000

50.000

60.000

70.000

80.000

90.000

100.000

Jun-0

5Ju

l-05

Ago-05

Sep-05

Oct-05

Nov-05

Dic-05

Ene-06

Feb-06

Mar-06

Abr-06

May-06

Jun-0

6Ju

l-06

Ago-06

Sep-06

Oct-06

Nov-06

Dic-06

Ene-07

Feb-07

Mar-07

Abr-07

May-07

Jun-0

7Ju

l-07

Ago-07

Sep-07

Oct-07

Superclients Billing

Special design of bills

Special characters and

Special branding for

Superclients


41

Market segmentation for better image

Triple A has implemented a program of segmentation of clients that has been very successful mainly on improving the customer’s perception of the company and its public image. Three key groups of clients receive customized treatment: i) retired person; ii) highly influential persons; (mainly opinion leaders); and iii) VIP clients including large customers, private sector executives, and government officials. The number of members in each one of the segments of the market is presented in the graph below.

0 + 1 Facturas

155.500

165.500

175.500

185.500

195.500

205.500

20/0

4/05

11/0

5/05

02/0

6/05

22/0

6/05

15/0

7/05

09/0

8/05

05/0

9/05

30/0

9/05

02/1

1/05

24/1

1/05

15/1

2/05

04/0

1/06

25/0

1/06

14/0

2/06

09-0

3-06

03-0

4-06

25-0

4-06

17-0

5-06

07-0

6-06

29-0

6-06

20-0

7-06

10-0

8-06

31-0

8-06

20-0

9-06

10-1

0-06

01-1

1-06

23-1

1-06

15-1

2-06

09-0

1-07

29-0

1-07

21-0

2-07

13-0

3-07

03-0

4-07

25-0

4-07

16-0

5-07

06-0

6-07

28-0

6-07

24-0

7-07

14-0

8-07

04-0

9-07

24-0

9-07

16-1

0-07

200.617

202.238

204.2470 – 1 Bills

Understand the needs of the market

Retired person receives pension once

a monthClients that require a

special treatmentLarge customers that

require special attention

Retired person receives pension once

a monthClients that require a

special treatmentLarge customers that

require special attention

Retired ProgramProgram for Influential Customers

VIP clients programRetired ProgramProgram for Influential Customers

VIP clients program

4,600 affiliated in the program with

collection of 101% (1,3 MU$D/year)

190 affiliated with a collection of 100,7%

average (121,000 U$D/year)

1,100 affiliated with a collection of 101%

in average (13 MU$D/year)

4,600 affiliated in the program with

collection of 101% (1,3 MU$D/year)

190 affiliated with a collection of 100,7%

average (121,000 U$D/year)

1,100 affiliated with a collection of 101%

in average (13 MU$D/year)


42

The program includes customized treatment to customers in areas such as: establishment of due dates for bills for retired individuals, in accordance to pension payment dates; more tolerance on bill collection and special communications with the customers, which includes visits from Triple A higher executives to influential individuals and VIP customers.

Facilitate customer contact / minimize visits to offices Various strategies have been developed to facilitate the customers’ interaction with the companies. These strategies include the ones outlined below. Bill collection in banks and supermarkets The three companies have implemented important programs to facilitate the customers the payment of their bills. One of these programs is the bill collection in banks and supermarkets. The costs associated to these points vary from 1% to 3% commission for supermarkets or a 0% commission for banks that handle company’s accounts. Mobile customer office ACUACAR has put in place an innovative approach to facilitate low-income customers transactions with the company. It is a van equipped with all necessary software and communications equipment to attend customers’ requests. The van visits low-income neighborhoods following a pre-announced itinerary. The van is connected to the data bases in the main office and, thus, it can process on-line requests, from bill payments to complaints and registration of new customers. Impact of strategy The management’s of the companies consider that the strategies to serve the client by the call center or by means other than visits to offices not only help to control costs of operation and of infrastructure needed to attend customers but also, and more importantly, help to

2


43

improve the image of the company as being more responsive to the clients needs by saving their time and cost to come to the offices. The graph below shows that the call center in Triple A has become in a short period of time, from late 2005 to late 2007, the main contact point between the company and its customers. In fact, the participation of the call center in the number of contacts increased from 35% - 40% in late 2005 to 65% in late 2007.

Accelerated response time

As part of the strategy to facilitate customers’ contacts with the company, Triple A developed and implemented new software to support the call center so as to ensure the rapid and accurate provision of information to the customers and the acceleration of actions to be taken in response to customers’ requests. The results of this strategy are presented below.

Call Center Vs. Commercial Offices

5,000

15,000

25,000

35,000

45,000

Clie

nts

Ser

ved

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

Par

ticip

atio

of

Cal

l Cen

ter

Atención Contact Center Atención Oficinas Comerciales % Participación Contact CenterCall Center Commercial Offices % Participation call center

20.00020.50021.00021.50022.00022.50023.00023.50024.000

Ene-Oct/06 Ene-Oct/07

Inconformidades Radicadas(Quejas, Reclamos y Recursos)

Less 9%

Complaints

Jan/Oct/06 Jan/Oct/07

Tiempo Promedio de Resolución(Incluye Resoluciones Inmediatas)

777889999

11121212131314

151413

02468

1012141618

Mar

-06

Abr

-06

May

-06

Jun-

06

Jul-0

6

Ago

-06

Sep

-06

Oct

-06

Nov

-06

Dic

-06

Ene

-07

Feb-

07

Mar

-07

Abr

-07

May

-07

Jun-

07

Jul-0

7

Ago

-07

Sep

-07

Response times in labor days (Includes immediate response)


44

Outsourcing During the visit, participants observed in detail successful programs of outsourcing, for example, as indicated in Chapter 1, EAAB outsource most of the customer services (meter reading, bill collection, and operation and maintenance of small diameter networks). Triple A also outsourcers most of its customers services, as showing the graph below.

Customer Service Outsourced Areas

Debt management

The high frequency of communication between Triple A and its customers has helped the company to carry out successful programs to regularize and to reduce the level of accounts receivable in arrears, particularly from low-income customers. One important program has been the subscription of debt payment contracts between the company and its customers. Under this program, company debtors subscribe contracts to pay their debts under terms that take into account their ability to pay. In some cases, the repayment period is up to 10 years. The graphs below show the number of debt repayment agreements signed and the reduction in the number customers with 2 to 6 bills in arrears.

We only pay successful actions

Reading• Payment for reading• Discounts and sanctions for errors• Sanctions for lack of meeting goals

Distribution• Payment for distributed bill• Discounts and sanctions for errors• Sanctions for lack of meeting goals

Collection• Payment for money collected• Limited time for payment• Discounts and sanctions for errors• Sanctions for lack of meeting goals

Disconnection and Re-

connection

• Payment for disconnection or reconnection• Discounts and sanctions for errors• Sanctions for lack of meeting goals

Points of collection

• Payment of a commission• Average commission : 1.6% • Average cost/coupon: $C 801 (300 fils) (IVA incl.)


45

Impact of Debt Repayment Agreements

Convenios activos

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

Ene-

05

Mar

-05

May

-05

Jul-0

5

Sep-

05

Nov

-05

Ene-

06

Mar

-06

May

-06

Jul-0

6

Sep-

06

Nov

-06

Ene-

07

Mar

-07

May

-07

Jul-0

7

Sep-

07

71,533

Debt Re-PaymentAgreements

2 a 6

7.000

9.000

11.000

13.000

15.000

17.000

19.000

21.000

23.000

25.000

27.000

29.000

25/0

4/05

20/0

5/05

15/0

6/05

12/0

7/05

11/0

8/05

12/0

9/05

18/1

0/05

18/1

1/05

14/1

2/05

06/0

1/06

01/0

2/06

24-0

2-06

29-0

3-06

25-0

4-06

22-0

5-06

15-0

6-06

13-0

7-06

08-0

8-06

01-0

9-06

26-0

9-06

20-1

0-06

17-1

1-06

14-1

2-06

11-0

1-07

05-0

2-07

05-0

3-07

29-0

3-07

25-0

4-07

22-0

5-07

15-0

6-07

16-0

7-07

10-0

8-07

05-0

9-07

28-0

9-07

29-1

0-07

2 – 6 bills


46

CORPORATE GOVERNANCE


47

CORPORATE GOVERNANCE: THE EXPERIENCE OF UNITED STATES OF AMERICA, SPAIN AND COLOMBIA This chapter summarizes the exchanges between representatives of the water companies visited, USAID’s representatives, and the Jordanian delegation on corporate governance. It also summarizes the lessons learned by the members of the Jordanian delegation. Boards of Directors - Main Highlights Fairfax Water: The Longest Term-Serving Board Fairfax Water is governed by a board made up of ten members with voting rights, and members with voice but not voting rights. The board members with voting rights are appointed by the Board of Supervisors of Fairfax County, Virginia, for a three-year term, renewable at the discretion of the supervisors. The board members without voting rights are appointed by wholesale customers. The average serving period for the ten board members with voting rights is 14 years. The longest-serving member has been in the board for 38 years, and the most junior member joined the board in 2008. Forty percent of the board has served at least 19 years, and 50 percent at least 4 years. The board is a multidisciplinary group which includes lawyers, engineers, economists and financial experts, drawn mainly from the private sector. The board meetings are held twice a month and are open to the public. The board members are highly committed to serve the community, without any significant financial reward. DCWASA: Board Representing Three Constituencies DCWASA is governed by a board of directors consisting of 11 principal and 11 alternate members representing the three constituencies served. The District of Columbia has a majority in the board, with six principal and six alternate members. Montgomery and Prince George Counties in Maryland have two principal and two alternate members each. Fairfax County in Virginia has one principal and one alternate. The Mayor of the District of Columbia appoints, and the DC Council confirms, all six District board members and alternates, including the Chairman. The other five principals and alternates are nominated by the other jurisdictions and formally appointed by the Mayor of the District of Columbia. DCWASA decisions require a simple majority (six votes). All board members vote in decisions directly affecting the management of joint-used wastewater treatment facilities. The decisions affecting only the customers in the District of Columbia are voted only by the District representatives.


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The DCWASA board has implemented a successful strategic planning and performance monitoring program. It also has achieved significant successes in the implementation of IT programs, in achieving a national leadership on Advanced Meter Reading, and in implementing a reform process through the IT strategic plan covering critical areas of the company’s operation. Long Beach Department: Small Board with Strong Influence The Long Beach Water Department is governed by a board of five water commissioners, each appointed to a five-year term by the mayor, subject to approval of the City Council. The board members are appointed taking into account the need of having a board with a diversity of competencies. Those competencies may include political relations, quality management, finance, engineering, law and others. Their appointment terms overlap so as to provide continuity. The small size of the board facilitates close interaction with company executives, and expedites program implementation and decision-making. The following decisions require board approval:

• Acquiring or selling real estate property • Deciding on large acquisition contracts • Establishing mission and goals • Adopting major policies and strategies • Submitting the annual budget to the City Council • Setting water and sewer rates • Selecting and hiring the general manager • Establishing compensation policies for all LBWD employees

The Company has a remarkably streamlined operation, with only 200 administrative/technical staff and personnel in the field. MWDSC Board: A Complex and Successful Governance Model for Bulk Water Supply The MWDSC manages bulk water in a highly water-stressed area. The company is the largest bulk water supplier in the United States, with a large number of high consumers made up by utility companies in the area. The board has thirty seven directors representing 26 metropolitan agencies. Every metropolitan agency has at least one representative. Some agencies have more than one, depending on the assessed valuation of their service. The assessed valuations take into account the number of customers and their consumption levels. The board of directors applies a weighted voting system, defined by the population and water consumption in the respective areas. For example: – San Fernando 144 votes – San Diego 36,606 votes


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– Los Angeles 37,539 votes The number of directors can change every August after an annual assessed valuation. The directors do not receive any remuneration from MWDSC, but some directors do receive a per-diem from the member agency they represent. The directors are appointed or elected at the member agency level. Most items reviewed by the Board require 50%+1 of the total number of votes to pass. The board of directors of MWDSC faces a great challenge in keeping its members well-informed, so as to facilitate the evaluation of initiatives under its consideration, as well as the decision-making process. The efforts placed by the utility’s board and management on informing board members and establishing an adequate working environment for the specialized committees4 include the nomination of a high level executive to mediate all communications between board members and management, and to facilitate the work of specialized committees. MWDSC board has demonstrated a superior ability in consensus-building and negotiation under the difficult circumstances emerging from the water scarcity in the region, and from the need to allocate water resources, which often are not sufficient to satisfy the demand of all participants. The outstanding performance of the management team in charge of facilitating the work of specialized board committees has been an important factor in the satisfactory board’s performance. Board Committees The water utilities’ boards review and decide on complex issues that require specialized knowledge and detailed analysis. As it is impracticable for the whole board to go into the details on these issues in plenary sessions, the boards in all visited companies have instituted specialized committees in each of the main fields of the utilities’ work. The committees analyze the issues and submit their recommendations to the whole board. This approach facilitates enormously the decision-making process in the board. The committees are normally made up by at least three board members and their counterparts in the management team. The counterparts in the management team may be the general manager/CEO/Director or the head of the specialized area of the committee. Other senior managers can participate in the committee, bringing the total to 6 to 7 members; external consultants can also be participants in the committee. Only board members have vote in the committees. The committees meet for a specific purpose such as review of a project, policy or other proposal presented by management. The scheduling of meetings depends on the urgency of the matter and the availability of board members. In large boards like the MWDSC, the committees have also a voting system with one vote per board member integrating the committee. 4 The specialized committees are discussed in the next section of the report.


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The proposals and recommendations presented by the committees to the Board have, generally, more weight than proposals directly presented by management; the discussion is normally shorter, thus expediting the decision-making process. The graph below illustrates the committee structure in the MWDSC. It has 6 permanent committees; special committees can be added at any time.

Structure in MWDSC’s Board of Directors And Committee Structure

The benefits of such committees can be summarized as follows:

• More fruitful interaction between management and board members. • More buy-in of projects by board members, and better access to the company’s

information. • More effective participation of senior managers in presenting and justifying specific

proposals. • Less confrontation and disagreement between management and board. • Accelerated decision making and improved outcomes.


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Effective Boards Based on the interviews, presentations and discussions with board members and top executives of the utilities, the Jordanian delegation concluded that the main elements that make a board effective are the following: • Well-defined mission. All companies visited had a permanent presence of their mission

and values in all activities and projects presented. The mission and values are the reflection of a clear understanding of board’s and management’s expectations.

• The right board composition. The city or county officials responsible for appointing board’s members generally consider that it is important to appoint a multidisciplinary team representing a variety of stakeholders and interests.

• The right processes. An adequate organization of the work of the board is a very important concern to all utilities visited. They consider that a carefully-prepared work program makes a significant difference in boards’ performance. Elements of the organization include: pre-agreed agendas, committee’s reports, information availability, and frequency of meetings.

• Effective leadership. The chairperson of the board has a key role in engaging members on the discussion of key issues, leading to effective discussions and decision-making. The chairpersons of the boards of the companies visited have demonstrated strong leadership capabilities.

• The right information. Utilities’ executives and board members assign high value to open communication and information sharing. Effective boards engage in effective dialogue aiming at obtaining a deep understanding of the issues at stake. This dialogue is made possible by well-planned communications and organization of work, as well as by effective committees’ work.

• The right culture. Board members are policy makers and as such they should build and encourage the development of the company’s culture. Based on its values and own characteristics, the utilities should build a culture that translates into a network of collaborative relationships among all employees, groups, and organizations that have something to contribute to the utility’s good performance.


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Contractualization USAID’s representatives gave a brief presentation to the Jordanian delegation on “contractualization”, understood as formal agreements reached at various levels of the company and with outside parties to achieve specific goals; the agreements also define performance measures and incentives. USAID’s representatives emphasized the proven success in the implementation of the contractualization concept in various water utilities. The purposes of contractualization are to improve performance, to increase accountability, and to establish a meaningful framework for introducing incentive plans that can be financial and/or emotional, while at the same time building the capacity of managers in business planning and contract negotiation. Contractualization includes the explicit and transparent definition of obligations of the parties involved. Contractualization can take different forms and can be between different participants. Three ways of contractualization are the following:

1. Contracts between the government/city or municipality and the utility 2. Contracts between the utility board and the utility executives 3. Contracts between the utility and an external party to provide a service

Three Levels of Contractualization

Utility

Board

Executive Management

City/Government

1) Contract/Agreement



OutsourcedOperator/Service Provider

Main features of successful contractualization are: • Objective. Contracts need to be clearly tied to specific goals and objectives;

these are necessary to increase performance accountability. • Clear principal/agent relationship. The counterparts of a contract should be

clearly established with enough powers and authority to enforce the contract or be responsible for the service delivered.

• Performance standards and tracking. The contract should have agreed performance standards and an adequate framework for tracking progress.

• Objective cause of termination. A key of successful contract management is the presence of objective mechanisms to terminate the services of non-performing operators.


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Performance Indicators and Incentives Successful contractualization models in water utilities introduce clear performance indicators and incentives at all levels. Managers and employees that have direct and indirect relation to the tasks subject to contractualization should benefit from the incentives agreed in the contractualization model. In the experiences reviewed by USAID, contractualization has helped utility employees felt reinvigorated and with a higher morale and commitment. Below are some examples of such performance measures and incentives. Contract between Government/City and Utility This macro contract is similar to a concession agreement, or to the Assignment/Development Agreement, in the case of AWC and MIYAHUNA. It represents a form of regulation by contract. In this type of contract there are, generally, performance indicators that are defined in agreement between the assignor (government/municipality) and the assignee (utility). These indicators are reported regularly, and are the basis for monitoring the utility’s performance. The incentives or penalties for this type of contract vary according to the degree of independence of the utility and the level of development of the regulatory body. In some examples in the United Kingdom, incentive-based regulation is applied having the regulator setting performance paths and allowing higher profits if the path targets are achieved. The regulator generally allows operators freedom to determine the best way to achieve the targets, and concentrates on monitoring performance indicators as seen in the graph below.

Contract between Board and Management Successful utilities have shown interesting progress in the relationship between board and management teams through the follow-up of the business plan developed by company executives and employees, and approved by the board.


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The business plan is a document that should clearly present the goals, the means to achieve such goals and the schedule to do so. In other words, this tool will clearly show the commitment of the company’s staff to reach specific results, in line with the guidelines defined by the board. Once the draft business plan is approved by the Board, it becomes an implicit contract between the board and management. Monitoring management performance under the business plan becomes an important task for the board. In addition, the business plan, as approved by the board, empowers the executives and provides them with the authority and resources necessary to achieve the plan’s goals. Key components of this implicit contract in successfully corporatized utilities are:

• Employment contracts for executives with limited duration (3 to 5 years) linked to implementation of the business plan, with the possibility of indefinite renewals.

• Incentive payments to executives that increase compensation by 50% to 100% based on clear performance criteria.

• Incentive payments to employees according to degree of responsibility for the implementation of the business plan.

The costs of the incentives in the business plan should be amply compensated by additional resources gained from improvements resulting from the implementation of the plan. Contracts between Utility and Operators/Service Providers Successful utilities have executed outsourcing contracts with other firms to operate or provide services to critical areas of the utility. A key factor of the outsourcing contract is that the head of the utility and the corresponding executives remained accountable to the

Business Plan and Incentives

Business Plan - Tool•Executes projects•Increases net revenue

Personnel Incentives•Performance based•Profit sharing

Corporate Incentives•Increases profitability•Enhances sustainability


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board for the outcome of the outsourcing contract. The contractor is accountable to the utility’s management. Incentives under outsourcing contracts include the following modalities:

• Fixed fee and bonus – Yerevan • Bonus based on operating income – Uganda • Fixed bonus per cubic meter of water billed & collected – Cote d’Ivoire, Senegal • Fixed tariff schedule and fixed lease payment to government – Lathur - India

A key success factor was related to the existence of shared bonus pools between the contractor and employees of the contracting agency forming “alliances contracts”. Another key element for the success of this outsourcing program is that it helps to build staff capacity in planning and contract negotiations. Information asymmetry is a key challenge in negotiating and monitoring outsourcing contracts. A way to face this challenge is to use short/pilot contracts, as a way to reduce the information asymmetry over short periods of time and reduce the cost of experimentation.

Alliance Contracts with Outsourcing


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INFORMATION TECHNOLOGY


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PLANNING AND INFORMATION TECHNOLOGY: THE CASE OF BOGOTA - COLOMBIA The shareholders and the management of EAAB, ACUACAR and Triple A have brought strategic planning and process to the forefront of business and information technology departments. Accordingly, the three companies have recognized that modern information technology is a vital component of business planning and monitoring and, thus, have made substantial investments in developing and refining their respective business process platforms. A business process platform is the unified environment that companies implement to perform core business processes and reorganize, extend, and create new business processes flexibly at predictable costs across the IT landscape.5

Strategic planning

All three companies had the strategic planning elements of vision mission and values very clearly outlined, however the Barranquilla Company was more proactive using such elements as part of its internal and external communication as well as for the customer service programs. The strategy pyramid developed by the company of Bogota has the following elements with its explanatory notes detailed below. During the past five years, EAAB has implemented this view of strategy and has translated this into their operations through a group of systems that are explained in this section.

5 SAP. Evolving to a Business Process Platform with SAP Solutions. www.sap.com/contactsap

Vision

Mission

Values

Policies

Objectives Strategies

Corporate Goals (Control Panel)

How we want to be the EAAB perceived in 4 years

“What” does EAAB do to get the Vision and “How” doest it

Guide for our individual behavior in front of the customers

Guide to take decisions at a managerial level and in our own work places

Guide to plan and execute projects and activities

Expected results


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The company of Bogota showed a more mature planning process that started 5 years ago with a change in the management model and the restructuring of its operation with the implementation of the SAP program.

Management Model The Bogota Company has as business value chain expressed in the graph below: The Company is operated under a management model using three types of agreements: i) management agreements as the agreements between the company areas and internal operation, ii) industry agreements between the company asset management areas and iii) the outsourced areas and the service agreements between the support processes and facilitators and the company user as well as the outsourced areas operators. The following graph shows the interdependence of different areas of the company and the framework of agreements that guide and norm the participation of each area.

UNDERSTANDING CLIENT NEEDSCLIENT NEEDS

INVESTMENT PLANNING AND

EXECUTION

CLIENT CONNECTION

RAW WATER COLLECTION

RAW WATER TRANSPORT

RAW WATER TREATMENT

TREATED WATER

DISTRIBUTION

TREATMENT OF SEWERAGE

TREATED WASTEWATER

DISCHARGECLIENT

SATISFACTIONCOLLECTION OF

SEWERAGETREATED WATER

TRANSPORT

CUSTOMER SERVICE

MANAGEMENT

SUPPORT PROCESSES AND FACILITATORS

Technology Services Legal Services

Human Resources Services

Procurement ServicesSecurity Services

Financial Management

Internal Audit Management

Sistema de Control Interno

Quality Control Management

PLANNING AND CONTROL

Planeación de la Gestión Control de la Gestión

Service Contract Management

Stakeholders Management


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The five areas outsourced under a management contract have three sub-agreements components: i) with the corporate committee, ii) with the asset management area and iii) with the service providers within the company. The interface of the company with the public is through the outsourcing companies and these have to meet certain coverage of service and quality.

Company ERP

All three visited companies had Enterprise Resource Planning (ERP) systems and they use them as a central tool for its planning exercise and its operations in all segments of the company. The Bogota Company has a SAP system after an investment of $us 28 million and 5 years of implementation and has all systems integrated and operational as shown in the graph below:

ServiceService AgreementsAgreements

IndustryIndustryAgreementsAgreements

ManagementManagement AgreementsAgreements

Ext

erna

lE

xter

nal C

lient

Clie

nt Coverageand Qualityof Service

Bill payment

Area 1ServiceD

elivery

CustomerCustomer ServiceService

Area 2

Area 3

Area 4

Area 5

Support Service AreasTechnology Manager Legal Manager HR Manager

ServiceService ProvidersProviders AreasAreas

CorporateCorporate CommitteeCommitteeFormed by all Area Managers

Asset Owner

Planning and Control Management Financial Management

WaterA

ssetM

anagement

Master Master SystemSystem

Sewer

Storm Water

Environmental

ServiceService AgreementsAgreements



ManagementManagement AgreementsAgreements

Ext

erna

lE

xter

nal C

lient

Clie

nt Coverageand Qualityof Service

Coverageand Qualityof Service

Bill paymentBill payment

Area 1ServiceD

elivery


Area 2

Area 3

Area 4

Area 5

Area 1ServiceD

elivery


Area 2

Area 3

Area 4

Area 5

Support Service AreasTechnology Manager Legal Manager HR Manager

ServiceService ProvidersProviders AreasAreasSupport Service Areas

Technology Manager Legal Manager HR Manager

ServiceService ProvidersProviders AreasAreas


Asset Owner



Asset Owner


WaterA

ssetM

anagement


Sewer

Storm Water

Environmental

WaterA

ssetM

anagement


Sewer

Storm Water

Environmental

UNDERSTANDING CLIENT NEEDSCLIENT NEEDS

INVESTMENT PLANNING AND

EXECUTION

CLIENT CONNEXTION

RAW WATER COLLECTION

RAW WATER TRANSPORT

RAW WATER TREATMENT

TREATED WATER

DISTRIBUTION

TREATMENT OF SEWERAGE

TREATED WASTEWATER

DISCHARGECLIENT

SATISFACTIONCOLLECTION OF

SEWERAGETREATED WATER

TRANSPORT

CUSTOMER SERVICE

MANAGEMENT

SUPPORT PROCESSES AND FACILITATORS

Sistema de Control Interno

PLANNING AND CONTROL

Planeación de la Gestión Control de la Gestión

PS - IM

Financial Control

PM QMPP

PM QM

SMHRMM

Utilities

GIS DMS Treasure

WMFO

PM


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The Company’s SAP system has 30 modules in 8 main areas: Control, Finance, Treasure, Utilities, Logistics, Utilities, Human Resources, Business Information Warehouse and Work Flow.

ERP System

Control function

The EAAB from Bogota has a clear internal control function that belongs to the Planning Directorate and includes the following components as detailed in the graph below:

This division was in charge of the implementation of the strategic plan and the restructuring process undertook with the assistance of Booz Allen and then followed up by the implementers of the SAP program. The process covered all areas of the company and integrated its operation around the initial vision. The plan at EAAB is controlled at three levels with control panel at every level:

• Strategic level • Tactical level and • Operational level

Logistics

Plan maintenancePM

Production Planning - Process Industry

PPPI

Quality ManagementQM

Sales andDistribution

SD

Service ManagementSM

Work managementWM

Material management

MM

Utilities

Customer CareServicie, FrontOffice

CCS FO

DeviceManagement

DM

Billing andInvoicing

B&I

Financial ContractAccounting

FI CA

Business InformationWarehouse

Work Flow

Human Resources:Control

Internal OrdersIO

Cost CenterAccountingCCA

Profit CenterAccountingPCA

Profitability AnalisysPA

Activity based costingABC

Producto CostingPC

Financial

Special LedgerSL

General LedgerGL

Assets managementAM

Accounts ReceivablesAR

Accounts PayablesAP

Project SystemPS

InvestmentManagement

IM

Treasury:

Treasury Cash Management

TR CM

TreasuryManagement

TR TM

Treasury FoundsManagement

TR FM

Corporate Planning and Control ManagementCorporate Planning and Control Management

Planning Directorateand Control of

Corporate Results


Corporate Results

Planning Directorateand Investments

Control

Planning Directorateand Investments

Control


Expenses, Costsand Profitablity


Expenses, Costsand Profitablity

Quality andProcesses Control

Directorate

Quality andProcesses Control

Directorate


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Levels of Control Integration with GIS

The GIS system is used across the organization in all three companies visited and is linked to other systems like the SCADA, the customer system data base, the asset management system and planning and economic systems used in the companies. Examples of the use of this are shown in the graphs below: GIS Linked with the Customer and SCADA Systems The access to accurate data with geographic information for all actions of the company allows for a more effective decision taking process with high impact to the company performance.

Strategic LevelStrategic Level Tactical LevelTactical Level Operational Level

Corporate Control Panel

Master SystemControl Panel

Customer serviceControl Panel

Areas providers ofService

Control Panel

Process 1 Control Panel

Process 2 Control Panel

Process n Control Panel

76% of customers belong to

Strata 1,2,3,

Socioeconomic Stratification in

Barranquilla

Tanks Tibitoc

Primary Network

Areas of Service

Hydraulic Sectors

Zone Low SouthZone Low NorthZone Low North Intermediate ZoneIntermediate Zone


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INFORMATION TECHNOLOGY: THE EXPERIENCE OF BARCELONA - SPAIN MIYAHUNA is looking for options to bring new knowledge to the company and solve the problems of isolated or missing critical information systems. The study tour was conceived in part to bring additional elements for further developing MIYAHUNA’s information technology. Main Components of an IT System During meetings with various companies during the study tour, mainly with ASERCO, the team had the opportunity to take a look at effective IT solutions applicable to water companies. The areas for IT systems were structured in the categories listed below. Commercial Cycle The successful implementation of this subsystem should help MIYAHUNA in improving the quality of the services to its customers, and in optimizing the company’s cash flows. The main components of the commercial cycle subsystems are the following: • Contracts Management. This subsystem helps in accelerating the contracting process, in

reducing contracting errors, and in enhancing the information on the customer base.

• Meter & Readings Management. This subsystem helps in optimizing meter investments through the implementation of mobile and remote reading technologies.

• Billing. This subsystem helps in improving the accuracy of the bills and of the revenue

forecasts, and in facilitating the implementation of rate changes. • On-line Office. This website subsystem helps in improving communication with

customers by facilitating access to their accounts, and making it easier to follow-up on pending requests and inquires.

• Collection Management. This subsystem helps in reducing the collection time and the

number of errors, in facilitating customer payments, and in monitoring the work of bill collectors.

• Outstanding Payments Management. This subsystem helps in implementing a more

effective control of accounts receivable, and in increasing the effectiveness of debt collection.

• Complaints Management. This subsystem makes available a communication channel,

with enough flexibility to facilitate and accelerate the resolution of customer complaints.


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Asset Management The area of Asset Management as presented by ASERCO includes various components such as: • Facilities Technical Management. This subsystem helps in rationalizing maintenance

costs of existing facilities (plants, equipment, etc.) and in improving maintenance planning.

• Geographical Information Systems (GIS). This subsystem, adapted to water businesses

has many advantages such as helping in determining optimal cost of different activities such as operation, maintenance, expansion and repair. It is a basic tool that helps in managing the database of the whole system by integrating all IT subsystems.

• Projects & Street Works Management. This system incorporates best practices for

planning and carrying out small works, optimizes works management and, thus, helps in increasing productivity and reducing operating costs.

Infrastructure Operation This is an efficient water operation program that includes water distribution schedules across different areas of the city, and a monitoring system, using a database with key network information. This program includes various subsystems amongst which are the following: • Meter Reading. This subsystem is generally provided as part of the SCADA and other

systems. The accuracy of real time reading is crucial to have an online system reporting continually. The graphic representation of the data is a very effective way to help the users in understanding the water network operations.

• Alarm Management. This subsystem, by comparing data recorded on-line with data collected in the past, helps the operators in anticipating problems in different areas of the network and, thus, in taking the necessary actions to solve the problems, or at least minimize their negative impact.

• Interface Management. This subsystem is used to manage complex situations where

water sources from different systems interface causing an impact that is difficult to analyze and predict without specialized software.

• Hydraulic modeling. The management of water distribution systems in cities with

significant variations in the terrain, as is the case of Amman, requires a detailed follow-up of the water volumes and pressures throughout the distribution system. This information, combined with additional information like number of households, time of the day, time of


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the year, and historical data on consumption can be processed and analyzed, thus providing a valuable input to for operational decisions.

Water Quality Another subsystem mentioned as part of the ASERCO’s presentation is the one related to water quality. This subsystem incorporates innovative practices and tools that help in increasing the efficiency and effectiveness of the water quality control system. Amongst the subsystems in this area the following were mentioned: • Sample Management. This subsystem helps in defining the sample, handling sample-

gathering, and a wide range of inquiries. • Database Management. This subsystem includes data from industries, laboratories, legal

indexes, waste types, and contamination risks. • Analysis and Reporting. This subsystem provides tools for identifying items such as

customers by type, and water quality in the treatment plants and sampling points in the network, thus helping in identifying non compliant samples under different points of view: legal, administrative and technical.

The graph below represents the Infrastructure Operation program.

IT Solutions for Infrastructure Operation

NetworksWater supply

(metering management)

Agbar Solutions

Readings

AlarmManagement

MeterModeling

InterfaceManagement

MeterGrouping

• Dashboard

• Meter Readings, Meter Grouping, Alarm handling, Meters Modelling & Interface management

Outsourcing IT Services ASERCO has provided different modalities of assistance in IT services to companies in Europe and Latin America. While the visit, the company presented the steps for IT


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outsourcing according to their experience. The presentation can be summarized in the following graph.

AGBAR Outsourcing Approach

Implementationmodel

Transition

Trust Generation Stabilization Continuous Improvement

Production Capacity

Contract Finalization

Service Start-up PhaseOrganizational Added Value

Continuous Improvement PhaseAdded Value in cost, technology and quality

Regular ServiceService DeliveryService take

over

End of Service

DiseñoCapabilities evaluation

Design

Design Phase This phase includes the following key steps:

• Scoping, where the client company defines its business objectives, the key issues to be addressed, the proposed scope and constraints of the IT project, and the likely implication of the project on the staff.

• Feasibility, where the consultant and the client agree on the scope of work, the expected benefits, the contractual framework, the approach to risk management, and the human resources requirements.

• Preparation which includes contract preparation, compensation agreement and

refinement of previous agreements. Transition Phase The transition phase starts once the consultant and the client have completed the initial design phase and signed the contract. The transition phase includes the following activities:

• Service consolidation or the grouping of different activities that will be subject of the IT support.

• Staff transfers to work under the responsibility of the consultant. During this stage

the consultant provides guidance to the staff allocated to the project, including help to overcome the uncertainties and risks of the transition, progressive induction into


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the proposed IT solutions, culture, career planning assistance, and definition of responsibilities.

• Assets Equipment. The new program is equipped with the assets that are required to perform the task. The required equipment has been identified by the client and the consultant during the design phase.

• Once completed all the above steps, the new service starts-up with the introduction

of the new systems and the full implementation of the service. Regular Service Once completed the implementation phase, the customer and the consultant continue operating the system for some time until all bugs are fixed and the system is working satisfactorily. In this phase we distinguish the following stages:

• Service management and reporting. The consultant continues supporting the client in the management and operation of the different systems and completing the implementation of the training program for the staff.

• Benefits realization. The consultant continues helping the client in consolidating the benefits provided by the new IT system. In this stage, the systems that do not show significant improvement can still be adjusted to maximize its potential.

• Continuous improvement. The consultant also trains the staff in the continuous evaluation, assessment, and improvement of the system.

End of the Service At the end of the regular service delivery, the consultant completes the transfer of technology following a methodology developed by ASERCO. Then, the consultant team is able to leave the project without any negative impact on the service. Additional assistance for the maintenance or the upgrading of the systems after this stage is subject to a new contract. Services Management As the success of the IT consultancy services depends highly on how the client manages the IT system after the consultant completes its assignment, ASERCO has developed a services management program that helps the client in enhancing the process of implementation of the new systems and processes. Under this program, the client and the consultant work together in overseeing and adjusting the new system to the company’s needs. The service management for AGBAR has the components shown in the graph below.


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AGBAR Service Management Approach

SSM

Service Quality Plan

Service Level Reporting

Service Level Agreements

Review

Service Strategic Management At this initial level of the service delivery, the client establishes its priorities and agrees with the consultants on the methodology to identify required improvements Service Quality Plan The Service Quality Plan developed by the consultant during the regular consultancy services defines the operational procedures. It remains with the client at the end of the contract. These procedures are critical for the transfer of knowledge, and have to be consistent with procedures applied in other parts of the organization. ASERCO, as part of the services management contract assist the client in implementing the service quality plan. Service Level Reporting Monitoring progress during the execution of the technical assistance is essential for the success of the program. The monitoring reports should include planned and actual values of the performance indicators, as well as trends. The monitoring system should also include comparisons between budgeted and actual inputs to the process. The management dashboard should be continuously updated.


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Service Level Agreements A basic requirement for a successful implementation is the clarity of the contractual relationship based on the initial contract that should include a clear scope of work and the type of services to be provided by the consultant. The service agreement should also include the performance indicators.


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STRATEGIC PLANNING


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STRATEGIC PLANNING: THE EXPERIENCE OF FAIRFAX – THE UNITED STATES OF AMERICA Bulk Water Planning MWDSC provides water to 18 million people distributed over 13,500 square km, with an annual demand of 5,109 MCM. The high water demand in this area, coupled with limited water resources has made the agency one of the leading implementers of programs to optimize water availability from various sources, including:

1. Conservation 2. Recycling 3. Desalination (planned) 4. Storage 5. Aquifer storage and recovery 6. Watershed initiatives 7. Water exchange programs with

agriculture MWDSC’s medium term planning until 2025 has the following targets.6

SWP: State Water Project MWDSC long-term planning comprises a 50-year horizon. It encompasses investments in each of 7 areas in the graphic above. The investment plan is executed through annual programs. Each of the annual programs is developed jointly with the 26 partnering 6 Local resources in the graph include sea and brackish water desalination.

MWD 2025 Dry-Year Resource TargetsMWD 2025 DryMWD 2025 Dry--Year Resource TargetsYear Resource Targets

Local 41%

Colorado River 19%

SWP Delta Deliveries

10%

SWP Transfers and Storage

14%

Conservation17%

An interesting program developed by MWDSC in irrigation districts follows two modalities: i) Introduction of water saving technologies. Using this

program MWDSC develops agreements with agriculture producers whereby MWDSC invests in water saving technologies for agriculture production in exchange of rights of use of saved water.

ii) Crop Rotation Program. Under this initiative, MWDSC provides income to farmers that agree not to irrigate 1/3 of their land for a year and have it as an increased rotation program to the traditional agriculture rotation practice.

Through agreements of this type, the MWDSC secured 267 MMM of additional water to the system in 2006, or 5% to 6% of the total demand.


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organizations in the area. Each of the partners follows the guidelines provided by MWDSC, but also introduces their own programs in response to the local needs and community expectations. Each district develops its own regulations and incentive programs. Business Case Preparation and Project Selection for IT DCWASA carried out an IT Strategic Plan for 2002-2005 following a methodology that sought to assure that the plan would be responsive to the needs of the entire user community. The plan started with input from DCWASA’s senior managers and personnel, and followed a prioritization process of specific projects. Every project above $ 100,000 should follow the business case evaluation methodology described in a manual developed for this purpose. The methodology includes:

1. Option identification. This section should define the problem or opportunity, identify and screen the options, and present the steps and methodology for the evaluation.

2. Cost scenarios. This section should estimate direct up-front costs, direct ongoing costs and indirect or hidden costs.

3. Benefits definition and analysis. This section should identify comparative advantages and level of service improvements. It will also quantify tangible and intangible benefits.

4. Risks. This section should present the assessment of risks and the plan of action to manage and minimize them.

5. Options analysis. This section should include cost benefit analysis, identifying moderate and optimistic scenarios, sensitivity analysis, probability analysis, etc.

Business Case Approval ProcessDepartment Prepares

the Business Case

Case presented to IT Committee

Department Prepares the Business Case

IT CommitteeEndorses?

Department Revises

Department Revises

Decision for Budget Review

Presents Exec. Committee

Exec. Comm.Approves

Project Begins

Project Dead

yes

yes

yes

yes

no

no


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The main highlights of this system of selection of projects are the following:

1. The projects emerge from an exercise of long-term planning (10 years) 2. The projects should be presented within the context of a mid term-horizon (2 to 3

years), and should include detailed definition, budget and implementation plan. 3. The template used follows a long-term and mid-term simulation exercise that is

translated into the annual budget. Discussing the experience of DCWASA on project management implementation, the Jordanian delegation recognized as valuable the following specific experiences:

1. The decision on who is going to manage approved projects - DCWASA’s personnel or an outside party - depends on factors such as size and required effort.

2. The analysis of available internal resources to manage a project is critical for its success. The hiring of an external manager (consultant) with the supervision of the company might be advisable in some cases.

3. The additional cash outlays of projects managed by outside personnel are generally offset by the savings from shorter implementation periods and lesser risks. The risk reduction is the outcome of having a well qualified implementer dedicated full time to the project.

4. DCWASA reduces implementation risks of large IT projects by hiring a project manager and, thus, avoiding delays, wastage of funds, or distortion of the projects as originally conceived.

Strategic Planning Fairfax Water Utility gave an interesting description of its strategic planning function, including a detailed breakdown of the steps in progressive level of detail as follows: Fitrt

Step 1. Based on the Mission and Vision, the company defines its goals in every major area of work.


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Step 2. Every goal has a list of strategies to achieve it.

Water Quality GoalFAIRFAX Water seeks to provide customers with water in the top range of

quality and will constantly explore avenues to ensure an adequate supply of raw and finished water.

Strategy #1 Continue efforts to ensure the quality of raw water for the Washington Metropolitan Area.

Action Steps1. Support Potomac Rives source water protection effort, including studies

and program implmentations through the Potyomoac River Basins Drinking Water Source Protection Partnership

2. Support and actively participate in efforts to protect the Occoquan Watershed including the Occoquan Watershed Monitoring Progra, and the Occoquan Nonpoint Source Program.

3. Implement and refine Occoquan Reservoir management strategies such as water quality monitoring, aeration and algaecide application.

Step 3. Every strategy to support every goal has its own action steps.


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Step 4. Every action step has a measurement of benchmark, the name of the accountable person and the deadline for its completion.


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COMPANY CULTURE


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COMPANY CULTURE: THE CASE OF COLOMBIA

Independence EAAB, ACUACAR and Triple A operate with a sound degree of independence from the municipalities and from the central government for their day-to-day activities. Yet, ACUACAR and Triple A, with private partners, have demonstrated more independence than EAAB. ACUACAR and Triple A, however, depend to a large extent on government financing for their investment programs. EAAB, on the contrary, finances its investments with loans and internal cash generation. This is remarkable if we think that the company was bankrupted less than 15 years ago.

Self confidence The successes achieved by the three companies during the past 5 to 10 years, including the achievements of their own staff have created a notable self confidence and pride on the management capabilities of the top executives and staff at all levels. The systems development in all three cases counted with the initial support from the mother companies in the cases of Triple and ACUACAR, and from system implementers in the case of EAAB. The adjustments and customization of the systems during the past few years have been mostly done by local staff who have reached a high level of competency. Local staff has also implemented successful programs and projects in areas such as customer services and water losses reduction.

Training ACUACAR and Triple A executives have been trained intensively on managerial and technical fields. The case of the operations manager of ACUACAR is illustrative of this training. He spent almost a year in Spain taking a high level executive management course, together with on-the job training at the mother company in Barcelona. All staff receives periodic training. Other executives like the customer services manager who is a Colombian had previous experience with the parent company in Dominican Republic.

Personnel benefits and workplace environment

The observation of the attitude of the staff in the three companies suggests that pride in the work and opportunities to learn are important sources of motivation. The physical conditions of the workplace seem to be another important motivator. For example, ACUACAR and Triple A have placed a lot of importance to the office equipment, particularly computers, to office furniture, and to clean and well-illuminated locations. The customer service facilities have decorations, announcements and places for the customer to sit while conducting business with the staff.


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Innovative personnel benefits were seen in the company of Barranquilla where all employees are offered free lunch in the company premises. Field crews are also provide free lunch in three different place in the service area.. The work schedule in the case of Barranquilla includes 8-hour-work shifts with one hour break. Employees can choose the early schedule from 7 am to 4 pm or from 8 am to 5pm. They can also choose to have an-hour break at their homes or at work. In the case of Cartagena the company has a fixed schedule for all workers with the exception of the field and special workers.


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WORKPLACE ENVIRONMENT AND COMMUNITY INTEGRATION: THE EXPERIENCE OF FAIRFAX - UNITED STATES OF AMERICA Importance of the Workplace All visited utilities consider that the design of physical space is essential for good staff performance, creativity, and job satisfaction. Three of the utilities visited, which are particularly aware of the importance of good physical space, have carried out renovations in recent years, and also maintain in place continuous improvement programs. In parallel with information technology innovations, the utilities have modernized office equipment and workplace layout and facilities. One of the most important features of the visited installations is the predominance of areas with natural light and clean environments. Work-stations have ample storage areas to facilitate the access to documentation and to help maintain clean and neat working places. There is also ample space for group meetings, equipped with boards and screens that facilitate the exchange of ideas among the staff. The meeting rooms, entrances to buildings, and corridors are generally professionally decorated, with designs and colors that encourage innovation and creativity. All work environments are non-smoking. All the utilities have state-of-the-art information technology. In the case of Fairfax Water, for example, there are touch-screens for interactive presentations, where a presenter can write on the screen and perform functions like accessing files, modifying texts, and executing calculations.

Workstations, natural light, comfortable chairs. Small meeting places for workgroups.


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Workstations with boards for annotations, clean walls. Touch screen TV for interactive presentations.

Lab corridors with natural light and artistic signs. Meeting room with modern design/lively colors. Integration with the Community Fairfax Water has a remarkable policy of integrating its infrastructure with the community, without affecting the landscape (see pictures below). This practice is highly appreciated by the community since it helps to preserve the high investments they made in real estate.

Pumping station with the appearance of a normal residence.


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Well and pumping station in the middle of a neighborhood with the appearance of a farm.

77 MGD

Pump StationClearwell4.5 MG

Various water infrastructure elements as a pump station and a well in the middle of a neighborhood transformed in tennis courts or basketball courts.


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EMPLOYMENT BENEFITS: THE EXPERIENCE OF THE UNITED STATES Water utilities in the USA have a quasi governmental status, and pay salaries lower than those in the private sector. The utilities, however, offer higher job security and long-term benefits. The latter characteristics attract professionals that opt for a long-term career, with less of the complications or risks of most jobs in the private sector. Long -term Vision and Job Security All the visited utilities have a long-term vision and prospects, which translate into potential long-term careers for their employees. The staff rotation is low for most employees in the utilities. The IT professionals are the exception, as the unusually high demand for these professionals translates into salary levels well above those in the public sector. This overall environment translates in a work environment that supports the timely implementation of long-term projects. It translates also in continuous improvements of operation and maintenance practices. Long-term Benefits One of the main reasons explaining why water utilities can attract competent professionals, even with relatively low salaries, is the long-term benefit package, which is similar to other government agencies throughout the USA. The quasi-governmental retirement plans covering the employees in the visited utilities offer a lifetime pension adjusted for inflation (defined pension plan) or lump-sum payments, together with other benefits such as disability protection, pension for survivors, death benefits, and comprehensive health insurance coverage. Some pension schemes are guaranteed by the water company like in the case of Fairfax. In the case of California, employees’ pensions are funded and guaranteed by the California public employees’ investment fund, one of the largest in the world. Difficulties in Attracting Talent in Certain Areas All the utilities visited face difficulties in attracting talent in IT and in other technical areas, such as hydraulic modeling and some engineering fields. These difficulties are due to non-competitive salary levels. To compensate for this lack of competitive capacity, the utilities use external consultants and contractors. Some of the strategies used are the following:

1. Outsourcing engineering talent for planning, designing and supervising construction, thus keeping a very small staff of 4 to 5 people at the company (DCWASA) with responsibilities in these areas.


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2. Recruiting young engineers, and offering them a special package for postgraduate studies and specialized training, in exchange for a minimum number of years of service in the company (case of Long Beach and Fairfax).

3. Outsourcing specific tasks like hydraulic modeling. 4. Outsourcing IT project management (DCWASA).


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TRANSIENT MANAGEMENT


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TRANSIENT MANAGEMENT: THE EXPERIENCE OF SEVILLE - SPAIN

The Institute of Water Technology has studied for several years the impact and behavior of fluid transients, or its most common occurrence called the water hammer. A significant outcome of these studies has been the software denominated Allievi to model fluid transients. Allievi has been used by water companies in cities experiencing extreme water shortages like Seville, which in some occasions has temporarily suspended or provided intermittent water supply.

Transient Management and the Experience in Seville During the water shortages in Seville in the 1970s, EMASESA suspended water distribution and temporarily emptied the network. This operating regime created significant damage to the network because of the transients or water hammer impacts. EMASESA, based on the lessons learned during this water shortage, handled differently a second water crisis in 1991-1993. This time EMASESA also suspended water distribution but without emptying the network, which was kept with enough pressure to fill-in the network at the highest elevation point of the city. The results this time were much better than the results during the 1970s shortage. Transient: the Meaning The transient is a temporary state in the network that is between two permanent states. A transient is also known by the name of its effect, shock or water hammer. The impact of this temporary situation in systems with interrupted supply causes serious damages in the network. The graph below is a conceptual representation of a transient.


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ShockEquilibrium 1 Equilibrium 2

A shock produces a transient between two permanent states

Origin of the Transient Transients are present in systems that are characterized by significant changes in water pressures, flows or speed. The extreme cases happen in systems that operate under interrupted or intermittent supply conditions. The “on-and-off” distribution of water causes innumerable transients in the system with all its negative consequences. Types of Transient Transients can be of various types depending on diverse elements combined in specific circumstances, including the type of pipe, the elevation difference, the quality of water, the size of the pipe, the existence of different elements of the network such as pumps, storage tanks, valves, and others. The main types of transient are listed below: Rigid models of mass oscillation

• Non flexible pipe • Non pressure fluid

Elastic models of ariete shock

• Elastic pipe • Pressure fluid


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Transients have important effects on the network, limiting its life, reducing its value, and causing water losses, that in many cases go undetected for long periods of time. The negative pressures created by the transients are also a cause of water contamination, particularly when water and sewerage networks are in close proximity. The main possible consequences of transient are the following:

• Maximum pressure that causes broken pipes • Minimum negative pressures that collapse pipes • Minimum pressure that reaches vapor tension

o Rupture of liquid column o Recovery of liquid column o Smash of liquid columns o Surge of pressure

The graph below is a pipe collapse as a result of low pressure.

Minimum Pressure reaches

vapor tension

Pipe collapsed

The Allievi Software Allievi simulates hydraulic transients in all kinds of water distribution systems, from simple to sophisticated ones. The systems can have constant or variable storage levels as well as storages with cross flows or side overflows. Also the systems can have pumping stations with parallel pumps. The systems can have valves for regulation, retention, pressure relief, extra speed, and localized losses.

The Allievi software recognizes protection devices like small tanks, chimneys (equilibrium, differential, variable section) and unidirectional tanks. With the help of this software the company can simulate hydraulic transients originated by:

• Start or stop of pumps


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• Closing and opening of valves • Network breaks • Any combination of the above

The variables incorporated in the Allievi software are:

• Flow oscillations: Q = Q(x, t) • Speed oscillations: V = V(x, t) • Pressure oscillations P = P(x, t)

The Allievi software provides graphs of the temporal and physical evolution of the water flows, speed, and pressure in the network. It also provides numerical values for each instant of the calculations. The graph below illustrates a transient due to valve closing.

Transient due to valve closing

Open Valve

Closing Valve

Closed Valve

How to Deal with Transients The Allievi software can provide valuable information to inform decisions on how to deal with transients and avoid its negative consequences. Some of the basic recommendations to avoid pipe breaks due to hydraulic transients are the following:

• Installing mechanical resistance to support extreme pressure • Limiting the ranges of pressure oscillations

o Slow-closing of valves o Programmed stoppage of pumps o Installation of protection systems

The graphs below illustrate protection systems.


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Level of static pressure

Burst

Distribution network fed by elevated storage

Protection Systems

Protection SystemsInertia between rolling masses

Stove

Retention valves By‐Pass

Equilibrium Chimeney

Relief Valve Vent

Unidirectional Tank

Intermittent Supply and Physical Losses Allievi provides estimates of water losses in intermittent supply systems, mostly caused by transient states in the network. These estimates are highly relevant, as they illustrate the impact of measures to reduce leakages and to provide continuous service.

Protection Systems • Retention valves by-pass • Stove or mini boiler • Inertia between rolling

masses • Equilibrium chimney • Relief valve • Vent • Unidirectional tank


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Traditional Indicators of Intermittent Water Supply¹

Flow Leaks Hours of Service

Consumption Leaks

m³/day m³/hour l/per/day m³/day m³/day %

Start 1000 50 10 100 500 500 50%

Stage 1 1000 40 11 112 560 440 44%

Stage 2 1000 30 13.3 120 600 400 40%

Stage 3 1000 20 17.5 130 650 350 35%

Final 1000 10 24 152 760 240 24% Notes: ¹ Estimates provide by ITA.

The critical part of a program to achieve the above results is the transition from intermittent to continuous water supply, together with a strategy to reduce physical losses.


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BULK WATER MANAGEMENT


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BULK WATER MANAGEMENT: THE EXPERIENCE OF SPAIN The delegation visited two bulk water agencies; the Water Agency for Andalusia in Seville, and the Guadalquivir Hydrographic Confederation in Granada. These agencies are responsible for allocating water rights in their respective regions. In discharging their responsibilities, the two agencies should follow directives issued by the European Basin Management Agency and the Ministry of Agriculture in Spain. Water is a very scarce resource in Andalusia, with marked seasonal variations. These variations are smoothed by a large number of water reservoirs regulating the rivers, particularly the Guadalquivir, which is the main river in Andalusia. There are 52 reservoirs in the Guadalquivir basin. At present, 80% of the water availability is allocated to agriculture and 20% to all other users, including urban water supply which has the highest priority. Main Features of Bulk Water Agencies in Spain Consensus Building Both Andalusia and Guadalquivir are examples of effective approaches to reach consensus for allocating water among different users and to enforce effectively and peacefully the corresponding decisions. Both regions have forums to deal with sensitive issues related to water uses, encouraging broad participation of different stakeholders. The forums come up with recommendations that are translated into formal agreements that end up in studies, regulations, or specific projects that are gradually implemented. The agencies understand that attempts to move fast without seeking consensus are likely to result in forceful reactions from negatively affected parties. Assigning Limited Water Rights New water users have to pay for the rights of existing users, as there are no more water rights to allocate. The agencies emphasize the concept of “Garantia”, that is, to make every effort possible to deliver fully the existing water rights. In time of severe water shortages, the agencies operate with the help of Crisis Committees, which provide a space for dialogue and transactions among affected users. These Committees have been very helpful in reducing social tensions. User Committees The Agency of Andalusia distributes water for agricultural use through “Users Committees”. The Agency delivers bulk water to the Committee, and the Committee is responsible to allocate it among its members. It is also responsible for operating the distribution system. There is a history of about 80 years of Users Committees.


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Efficiency in Water Use Matters The water allocation to the agricultural committees in Andalusia is based on 5,500 m3 per hectare per year. The farmers under each Committee may trade water allocations. The Agency is promoting a more efficient water use in agriculture through incentives like financing investments required to improve distribution channels. Prices of Bulk Water The price of water to the farmers in Andalusia has two parts. One which corresponds to the agency’s cost of delivering the bulk water to the committee (price in “Alta”); and the other which corresponds to the costs of the Committee. The price in “Alta” depends on the time of construction of the infrastructure providing the service to a particular Committee. The supply through infrastructure built before 2000 has the lowest price (about € 0.016 per m3). The price for supplies from infrastructure in the Guadalquivir built after 2000 is about four times the first one. The desalinated water has a cost of about € 0.80 but it is being subsidized to the users. The subsidy is about 50% of the cost. When possible, water users mixed fresh and desalinated water as a means to avoid rationing. The higher costs for infrastructure built after 2000 are due to more stringent environmental and social provisions. For example, it is not longer acceptable to resettle population to build new reservoirs. Water Bank The Andalusia water agency is considering the establishment of a bank for water (Banco del Agua) to facilitate transactions of water rights among water users, with government intervention. The bank would also be an instrument to help the government in balancing economic and social considerations in allocating water resources. For example, it is likely that the transference of water rights affects not only the owner of the rights but a number of people with industries and services associated to the activities of the owner of the water rights. The bank would be along the lines of the one (s) in California, United States. The water agency emphasizes that a flexible but controlled system for transacting water rights is essential to ensure that the water is allocated to the more productive users. In this context, the agency assigns priority in the allocation of water rights to agricultural activities with a high value added, like vegetables and fruits exported to other countries in Europe. The same applies to other uses like industry and tourism. The water availability has to be guaranteed. Water Agreement for Andalusia The Andalusia Water Agency recently concluded the denominated “Water Agreement for Andalusia”. This agreement is the outcome of 12 months of discussions in forums with almost 1 million participants. The objective of the agreement is to define the policy for


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distributing water among stakeholders, taking into account the need to promote the region’s social and economic development. The agreement has the following structure and content: 1. Situation of Aquatic Systems. Includes the agreement to carry out of studies on

wastewater treatment, procedures for monitoring groundwater quality, processes for treating contaminated water, plans for recovering ecosystems, and plans for introducing tourist and recreational water uses.

2. Delivery of Water Services to Customers. Includes a program for studying issues like wastewater treatment in rural areas, water provision in low-population-density areas, low prices of water services, water deficits, modifications to the regulations for residential water distribution, new regulations for wastewater treatment, creation of a monitoring body to oversee the quality of water delivery, new financing systems to allocate infrastructure costs among differing users, including tariff adjustment in the next five years, and the water law objectives of minimum hydraulic efficiency levels for urban areas.

3. Sustainability of Water Services. Includes developing consensus for the management of water catchments areas, developing plans for increasing investments in catchments areas, freezing extraction in water systems with deficit, plans for completing modern irrigation programs, plans for introducing billing according to volumes of water, mechanisms to reach consensus among water users, and priorities for water uses.

4. Floods. Includes developing regulations to protect land affected by floods, plans for

introducing a hydrologic model covering the Andalusia territory, and flood emergency plans.

5. Drought Management. Includes early warning systems for dry periods, mechanisms for enforcing drought emergency plans in municipalities with more than 10,000 inhabitants, mechanisms for providing technical assistance to municipalities, and ways for promoting agreements among users to allocate water during drought periods.

6. Economic and Financial System. Includes the introduction of corrector tax coefficients for the availability of water for different rural and urban uses, modernization of tax instruments like occupation fees, use and benefit from public hydraulic resources, and tariffs for water use. Introduction of a fee for use of groundwater, gradual implementation of a fee for water and sewer treatment in urban areas.

Management of Water in Andalusia. Includes a new water management system for the region, including provincial delegations, increasing the administrative efficiency, plans for implementation large infrastructure projects, establishing the economic regime, and promoting stakeholders participation in the decision making process for water allocation.


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OTHER INNOVATIONS


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TECHNOLOGICAL INNOVATIONS: THE EXPERIENCE OF FAIRFAX - THE UNITED STATES OF AMERICA Ozone Retrofit for Water Treatment The water treatments plants visited in Washington (DCWASA) and in California (MWDSC) have incorporated ozonization into their water treatment processes. Ozone, a form of oxygen, is an excellent water disinfectant. The ozonization process produces fewer byproducts that would otherwise form in the chlorine treatment. This technology destroys a wider range of organisms in drinking water than chlorine and requires less contact time than chlorine. Utilities generally use both chlorine and ozone. The impact of this technological improvement has been felt by customers of the Fairfax Water Utility that now see their water as the one with the highest quality compared with other companies providing the service in the region.

Ozone treatment tanks at Fairfax Water. Ozone is created by applying an electrical current to pure oxygen in specially designed chambers. From the chambers, ozone is dispersed in the settled water. Ozone breaks down organic matter in the water into small particles that are then captured in the filtration process. Advanced Meter Reading Technology DCWASA is a leader in Advanced Meter Reading systems in the water sector in the USA. The technology applied by DCWASA enables it to read meters remotely, without having to physically visit the property. The system is as follows. An electronic module is installed inside the meter. The module sends information on water-usage, using wireless transmission, to a central data collection unit. Then, the data received in the data collection unit is automatically forwarded to DCWASA’s customer service headquarters for billing.

There are many benefits to using ozone, such as the inactivation of Cryptosporidium and Giardia, with improvements in taste and odor and reduction in the formation of disinfection by-products.


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DCWASA’s fixed-wireless technology enables the utility to collect data from meters on real time, thus, allowing it to obtain information when it is needed and at low cost per reading (excluding installation costs). This fixed-wireless network not only minimizes meter-reading costs; it also facilitates leak detection (e.g. by looking for unusually high night flows at individual residences), other conservation activities, and improves customer service. DCWASA’s total investment in AMR was $ 36 million (130,000 meters with an average cost of $ 277 per meter - all types of meters included: bulk, for buildings, and for residences). The investment cost includes the meters, the transmitter, the receiving stations, and the software and systems needed to monitor it. For residences only, DCWASA’s representatives estimate that the total investment cost would be about $ 130 to $ 150 per meter. • The main benefits of the project were:

o Increased revenues because more accurate measurements. o Reduced cost of service since there is no need to read manually each meter. o Improved customer satisfaction, mainly through assistance to reduce wastage or

losses. o Additional service offerings. The technology allows for additional services that

can be provided for the benefit of customers like leak monitoring programs. • The main challenges of the project were:

o Long implementation time. It took 5 years; 2 more than expected. o Underestimation of the network condition that required more than expected

funds for system repairs and upgrading. o Support costs, including program developers and IT staff, higher than originally

planned. o Technological issues related to equipment performance and reliability.

AMR Technology

Meter with pulse sensor and

radio frequencytransmitter

Data Collector with modem and cellular

data transmitterHeadquarters

system compiles and cleans data

BillsReportsAnalysis

BillsReportsAnalysis

2500 meters per data collector

Readings can be done as frequent as desired. In DCWASA meters are read once a month but can be read up to 4 times a day to investigate any abnormal situation.


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After 5 years of implementation, DCWASA concluded that the investment on AMR technology pays for itself through the following means:

1. Reduction of reading and billing costs. 2. Reduction of connection costs for new customers (in the US, meters are under the

name of the person living in the residence, so there is a cost involved in the change of customer).

3. Increased revenues (7%) through more accurate readings, and reduction in the number of estimated bills (down to 1%).

4. Reduction of water losses through theft and illegal connections (mainly through more accurate monitoring of consumption).

5. Reduction of meter monitoring and maintenance costs. 6. Preservation of network value allowing more effective preventive maintenance. 7. Reduction of call center costs (36% less calls from customers) and costs to solve

customer’s complaints (50% reduction in bill investigations).


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INNOVATIONS: THE EXPERIENCE OF SPAIN ITA Experience with Meters ITA considers meters a crucial element in water supply systems. Water meters are the only tool that provides data from the field, which is essential to base critical water supply policies. The meters collect data to determine the amount of water delivered to customers. This data, together with the relevant tariff schedule determines the revenues of the water companies. Meters also allow the water companies to evaluate water losses, and customer’s behavior. The reliability of the meters is crucial. Selection of Meters A first key step is the selection of meters, taking into account the following factors:

• Materials used to manufacture the meter • Quality of water • Installation conditions • Degradation of mobile partes • Alteration of speed profile • Volumes consumed • Flow pressure • Meter design

An important element before the company’s management decides the purchase of a particular meter is the experience on the ground. To do this, there should be a careful monitoring and analysis of meters installed in the field, and the results of its interaction with the customers, the conditions of installment, and the response to water quality, volume, pressure. Metering System Audit The water company should put in place a meter audit program to continuously evaluate the quality and state of meters in all the service area. To make this program cost-effective, the company should apply adequate sampling methods. The Information provided by the audits helps in maintaining the integrity of the metering, and in guiding future meter purchases. Selection of Meter Model This decision should take into account the results of the audit of installed meters. A deep knowledge of the quality of the meters on the ground and of their response to different conditions should allow the company’s management to make informed decisions about the most cost-effective meters.


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The graphic below shows the cycle of an integrated program for water meters management.

Water Meters Integral Management

Metering Systems Audit

Selection of Meter Model

Quality Controls

Maintenance of Meters

Continuing Monitoring of

Meters

Replacement Program

Cost Benefit Analysis

Quality Controls. A detailed quality control system at every stage of the purchase and installation of meters is essential for the success of the metering program. The company should thoroughly check the meters before installation. It also should make sure about the quality of the installation workmanship. Maintenance of Meters. Once installed and registered in a data base system, the meters should have a scheduled maintenance that should be completed properly, including tests, and replacement and cleaning of parts. This activity should be properly funded and staffed with trained personnel. Continuing Monitoring of Meters. The meters should be checked at the time of reading, and a system of random checks should be in place to verify the consistency of the information provided by the meter and relevant information available from other sources. Replacement Programs. The meters come with factory recommendations for replacement, but it is the company’s responsibility to develop and implement its own replacement policy based on the quality of water, the type of distribution network, and the culture of customers. A good data base on meters is essential for developing and implementing a cost-effective replacement program. Cost Benefit Analysis. The metering program should be cost effective.


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Meter Program in EMASESA

Meter reading is not only an instrument for invoicing. It is also a way to get information about consumption. EMASESA set the objective to reduce the average age of the meters in use to less than 4 years. EMASESA stock of meters is made up of: electronic meters (77%); mechanical class B (8%); and mechanical class C (15%). Electronic meters are very accurate. They detect with great speed small interior leaks. This contributes to the objective of reducing non-necessary water consumption.

Woltmann, ITA Software to Manage Meters

The optimum management of the meter system requires knowing both the metrological characteristics of the meters that are installed and the water consumption conditions of the users. This knowledge can only be attained by performing a considerable number of tests, both in the laboratory and on the ground. The tests should help in determining the effective error curve of the meters in use. Woltmann software stems from ITA's experience in studies and analysis of the metrological behavior of meter systems. Woltmann is both an extremely flexible database and a sophisticated analysis tool for calculating errors in measurement. Woltmann allows the user to store the data on tests performed on water meters, and to monitor the users' consumption patterns in a single format, specially designed for this purpose. It also has powerful analytical tools which enable the measuring of error in different types of meters to be worked out quickly, reliably and accurately.

Three Ideas from ITA to Take Home 1) Meters are a key element in the water services

• Have a great influence in the financial balance • Provide information required for strategic decisions

2) Meter errors are something “ALIVE” • Depend on the demand • Evolve with time • Depend on multiple interrelated factors

3) Meter management is a continuous cycle exercise • Meters installed require constant supervision and study • Perseverance has the price of best decisions


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Drought Management in EMASESA EMASESA has developed an emergency plan for periods of water scarcity. The plan lays down specific actions to be taken by the company during drought periods. The actions are grouped in four categories: demand-side management, external resources, legal and institutional action, and coordination with other communities and organizations. EMASESA’s Emergency Plan envisages the creation of a Drought Committee as the decision-making unit responsible for implementing the Plan. The Committee should work in coordination with the city’s Resource Protection Committee (RPC), which was established by the municipality with the role of designing and implementing city-wide water conservation policies. To enhance the management of the droughts, EMASESA has also developed a set of drought emergency indicators, as shown in the graph below.

Emergency Indicators in EMASESA

Alert

Emergency

Strategic Reserve

Volume in Reserve

Pre Alert

Drought Office EMASESA has also established a drought office. This office is a support structure whose primary function is to promote the efficient use of water for irrigation. The main activities of the office include inspecting and repairing the infrastructure, and installing water-saving devices and meters in irrigation facilities and fountains. External Communications Plan EMASESA has in place an external communications plan to inform the community about water issues. EMASESA publishes, as part of the communications plan, a catalogue of water-saving devices, and distributes guidelines for sustainable water consumption.


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EMASESA Experience in Raising Funds EMASESA signed in 2002 an agreement with a consortium of banks for a 100 million euros loan to finance infrastructure improvements, including new reservoirs, replacement of tertiary networks, reduction of losses, and improvements of water treatment plants mainly to reduce electricity consumption. To repay the bank loans, the Municipality approved a new tariff level for the period 2001 to 2016. As part of the process, it was necessary to get a transaction grading from Standard & Poor’s and Moody’s. Crisis of Water Supply in Seville Just at the end of the International Exposition in Seville in 1992, the water system collapsed and the city had to shift from permanent to intermittent water supply, and also had to use water of a river that was not considered appropriate for drinking water without an expensive treatment. The reasons for such collapse are the following:

1. Inadequate calculation of available resources. EMASESA did not have in place adequate methodologies to quantify the reservoirs capacity.

2. Lack of appropriate demand management. EMASESA did not have an adequate measurement of the evolution of consumption, and did not have in place a tariff system encouraging efficient water usage.

3. Lack of strategic planning and availability of long-term water rights. The water allocations for agricultural uses did not take into account recent urban developments.

4. Poor management of surface and ground water. The poor knowledge of the interaction of both types of sources and the long-term planning that has to be implemented to adjust both hydraulic cycles had not been taken into account.

5. Restrictive environmental measures that reduced the capacity of the reservoirs in various locations.

6. The lack of communications channels with customers the lack of consumer education on water issues.

Innovation at EMASESA

EMASESA has implemented a number of innovations in recent years. These innovations are outlined below. • Global Reporting Initiative (GRI). EMASESA is a member of GRI, a large multi-

stakeholder network of thousands of experts in dozens of countries worldwide. The GRI issues the Sustainability Reporting Framework, which provides guidelines for the water companies to inform the public about their economic, environmental and social performance. In line with the Framework. EMASESA prepares an annual report that


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includes a detailed account of the activities that make EMASESA sustainable in the community of Seville.

Energy Efficiency • Electricity Savings in Dams. EMASESA has installed 4 mini plants with an installed

capacity of 11.277 MW at its dams to harness their hydroelectric potential. The power generated by its dams and wastewater treatment plants meets 44% of the company’s entire energy demand. The actual output varies according to climatic conditions and precipitation.

• Electricity saving in wastewater treatment plants. EMASESA has achieved a total

generation of electricity of 16.13 GWh of electric power through cogeneration equipment to harness biogas produced in its wastewater treatment plant.

• Photovoltaic solar power. EMASESA installed a solar 10,000 Kwh power plant in the

wastewater treatment plant. This capacity is the equivalent to the annual consumption of 250 households.

• Biosolid management and reuse. EMASESA produced in 2007 72,000 tons of sludge

suitable for farming. Quality Plan ISO has awarded a number of certificates to EMASESA since 2004. These certificates include the following: • ISO 9001 compliant with Quality Management System • ISO 14001 compliant with Environmental management System • ISO/IEC 17025 accreditation of its laboratories for technical competence for drinking

water, metering laboratories and water hygiene. • ISO/IEC 17025 accreditation for in situ effluent control of pH, temperature and

conductivity. • ISO/IEC 17020 accreditation as an inspection body.

Various Programs SECORA system is a corporate communication system intended for municipal services that offer a broad coverage based on the single Tetra digital network which is four times more efficient than analogue systems.


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Hipsalnet project, entails laying over 100 km of optical fiber in the city of Seville sewer system to provide broad-band communications infrastructure for voice, data, video and internet services.

DeSevilla Bottled Water

EMASESA presented at the ExpoZaragoza in 2008 the bottled water “DeSevilla”. The bottled water initiative is part of a broader program aiming at developing the image, identity and pride of Seville. The bottled water has a citric flavor and the smell of a flower typical of Seville. The water has low content of minerals and sodium, and is recommended for people with hypertension and kidney problems. The glass bottle is decorated with the name of Seville in vivid red color. EMASESA is the first water company in Spain that presents a product like this. The first phase of commercialization will be restaurants, hotels and special foods stores. In a second round, this bottle will be distributed to supermarkets and the general public, but without losing its high-quality image. In a third stage EMASESA plans to sale it internationally, starting in

London, New York and Dubai. All proceeds from the sale of this product will be allocated to fund the 10 most crucial problems affecting water in Seville. As presented in the Zaragoza Expo such problems are: water waste, uncontrolled fishing, toxic discharges, world thirst, floods, disposal of waste to the sea, extreme drought, shortage of water reserves, and contamination. Benchmarks: SIGMA Software ITA developed SIGMA, which is software that collects, calculates and processes data to assess performance of water services. The SIGMA software uses as basic information performance indicators (PI) which are comparable measures of performance that usually are ratios or a relationship between significant measures of utility performance. The PI’s are related to a specific time period, allowing for clear comparisons with targeted objectives. These should be simple and easy to understand, objective and unbiased, avoiding any personal or subjective appraisal. Indicators only become meaningful when compared to previous values in time, identifying trends. They should be also comparable with the values of previously established objectives and with the values of the same indicators from peers.


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SIGMA- System of Performance Indicators for Monitoring Supplies • SIGMA is the first general software of Management Indicators for water services.

With SIGMA, the selection, evaluation and analysis of management indicators can be handled more easily, guaranteeing the consistency of the data and the calculations. The indicators can be imported from well-known sources (such as those of the World Bank or the IWA) or these can be created from zero.

• SIGMA enables following-up and controlling the key information in the program. SIGMA is useful for detecting trends, or for comparing the indicator values with those of other companies.

• The Lite version of the program is the official software of the system of indicators of the International Water Association and can be downloaded from the program website. The professional version of the program incorporates countless improvements. In July 2008 Sigma 2.0 was launched, with the possibility of performing metric benchmarking projects over the web.


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ANNEX

STUDY TOURS DETAILS

• STUDY TOUR TO COLOMBIA

Dates: From December 1 to 11 of 2007 Participants:

Kamal Zoubi MIYAHUNA’s CEO Ghazi Khalil MIYAHUNA’s Operations Director Majed Okour MIYAHUNA’s Acting Technical Services Director Mohammed Malkawi MIYAHUNA’s Customer Services Director Nidal Akieli coordinator with MIYAHUNA/Greater Amman Municipality Bader Kassab USAID/Jordan Bernardo Gomez SEGURA/IP3 Jose Valdez SEGURA/IP3

Entities Visited:

Bogota Water and Sewerage Company (EAAB) Water, Sewerage and Solid Waste Company of Barranquilla (Triple A) Water and Sewerage Company of Cartagena (ACUACAR)

• STUDY TOUR TO THE UNITED STATES

Dates: From April 26 to May 6 of 2008 Participants:

Saad Abu Hammour MIYAHUNA’s Deputy CEO Imad Zureikat Aqaba Water Company’s General Manager Tiseer Murad MIYAHUNA’s Finance Director Samih Al Amad MIYAHUNA’S Human Resources Director Maen Al Bawad MIYAHUNA’s Distribution Manager Vince Byrne SEGURA/IP3 Roger Patrick SEGURA/IP3 Jose Valdez SEGURA/IP3

Entities Visited:

Fairfax Water District of Columbia Water and Sewer Authority (DCWASA) The Metropolitan Water District of Southern California (MWDSC) The Long Beach Water Department (LBWD)


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• STUDY TOUR TO SPAIN Dates: From October 23 to November 2 of 2008 Participants:

Munir Oweis General Secretary WAJ/ Chairman of MIYAHUNA’s Board Mousa Jamaani General Secretary JVA/member of MIYAHUNA’s Board Kamal Zoubi MIYAHUNA’s Chief Executive Officer Imad Zureikat Aqaba Water Company’s General Manager Jeries Dababhneh MIYAHUNA’s Technical Services Director Nasser Bathaineh MIYAHUNA’s Information Technology Director Joumana Alayed MIYAHUNA’s Communications Manager Bader Kassab USAID Water Directorate Bernardo Gomez SEGURA/IP3 Jose Valdez SEGURA/IP3

Entities Visited:

AGBAR GROUP and ASERCO in Barcelona EMIVASA, Valencia Water Company EMASESA, Seville Water Company Water Agency for Andalusia in Seville Guadalquivir Hydrographic Confederation in Granada Water Technology Institute (ITA) in Valencia

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