2007 Performance Management for Utilities Measuring, Managing and Improving Utilities

DEVELOPING A CUSTOMERFOCUSED PERFORMANCE MANAGEMENT PROGRAM Mark A. Halleman Infrastructure Management Group Inc. July 30, 2007

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Agenda • Introduction…..starting with the end in mind • The process • Important preliminary decisions • Getting started • Results Infrastructure Management Group, Inc.

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Introduction This presentation is about the process of developing an Executive Management Dashboard that displayed KPIs for 22 divisions. It is about starting with pencil and paper and not about simply selling a software solution. Results included: • A set of validated, customer-focused performance measures for selected departments. • Increased awareness of the value of using performance information • A validated and established process for collecting and reporting performance measures for selected departments. • A trained staff that was familiar with the process of collecting, reporting, and most importantly using performance measures as a management tool Infrastructure Management Group, Inc.

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And how we moved from this…

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15.229

Chr: 191 on 2/13

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to this…

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… and finally to this!

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and this…

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Alan Brache says… Brache, Alan P. How Organizations Work – Taking a Holistic Approach to Enterprise Health. New York: John Wiley & Sons, inc., 2002

Typical information/knowledge management weaknesses include: 1. 2. 3. 4. 5. 6. 7. 8.

Assuming that computers are the solution. Putting computer cart before the business horse. Tolerating a culture that discourages knowledge sharing. Assuming that information technology has to be managed internally. Underestimating cost and time. Installing systems that do not provide strategic information. Assuming that e-buiness will enable new markets. Delegating information/knowledge management to the Information System Department. Infrastructure Management Group, Inc.

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The Process beginning with paper & pencil

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Why Was This Project Undertaken? To be able to demonstrate that we were: • Doing the right things, supporting the core mission • Doing them the right way, improving efficiency, increasing productivity and reducing operating costs • Improving service delivery • Increasing customer service • Ensuring regulatory compliance • Mitigating the impact of future rate increases

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Important Preliminary Decisions Making some preliminary decisions before you start will pay dividends later on…….. Create a Steering Team EMT • Characteristics for an effective team

Create Design Teams • Criteria for selecting team members

Decide where to start • Criteria for selecting

Hiring an outside consultant • What can a consultant do that we can’t do for ourselves?

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Important Preliminary Decisions Creating Teams Create a Steering Team - EMT • Characteristics of an effective team • Made up from utility staff • Champions committed to the success of the effort (leaders) • Have the position power to see that commitments are met. (overcome No’s)

Create Design Teams • Criteria for selecting team members

Decide where to start • Criteria for selecting Infrastructure Management Group, Inc.

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Important Preliminary Decisions Creating Teams Create a Steering Team EMT • Characteristics for an effective team

Create Design Teams • Attributes of team members • Credible • Technically knowledgeable • Potential change agents • Trustworthy

Decide where to start • Criteria for selecting

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Important Preliminary Decisions Finding the right place to start. Create a Steering Team EMT • Characteristics for an effective team

Create Design Teams • Criteria for selecting team members

Decide where to start • Selection Criteria: • High external customer visibility and a core function • Big and complex enough to demonstrate that the effort is worthwhile • Manageable enough to control and developed quickly • Strong likelihood of success • Quickly produces tangible benefits Infrastructure Management Group, Inc.

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Important Preliminary Decisions Make certain the team knows what it is suppose to do….. When Chartering a Team, Define: Its responsibilities What decisions it is authorized to make Who they report to, and when and how to do so What decisions lay beyond the DT’s responsibility boundaries • They have a responsibility to ask, “Are the right people on the team?” or “Do we need additional resources?” or “Do we need a decision to be made by the EMT?” • When progress will be evaluated • When the team’s work is completed • • • •

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Important Preliminary Decisions Should I have outside help? Hiring a consultant • Provide continuity for the team as DT members were required to perform their normal duties • Bring experience and expert knowledge of the “process” of change • Function as neutral facilitators • Provide objective feedback to keep the Utility’s teams to stay focused and on track • Planning and facilitating the workshops and provide OJT training and knowledge transfer to participants • Provide another perspective and serve as content experts as well as process experts - Serve as a catalyst for change

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General Criteria for Creating Performance Measures • Applied across the entire enterprise • Reflect the voice of the customer • Serve as management levers • Are dynamic and need to be routinely reviewed to make sure that they provide meaningful information • Measures continuous improvement, identify opportunities for training, justify new tools, etc

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Establishing Measures Determining what should be measured? • Create a work catalog • Separate activities into core, support and convenience activities • Focus on Core Service delivery • Use of Action Verbs • Ask, “How can you prove to yourself that you are doing the right thing and doing it the right way?” • Avoid asking • How it can be measured? • Is the data available? Infrastructure Management Group, Inc.

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Establishing Measures Use a Balanced Approach Performance management is a balancing act of three competing forces: • Effectiveness – doing the right things - right. “There’s no sense doing well what shouldn’t be done at all.”

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Efficiency – the unit cost or measurement that highlights the “cheapest, fastest, lowest, highest, etc.”

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Quality – not reducing costs in ways that sacrifice safety, environmental compliance, or customer satisfaction. “voice of the customer.” “value is in the eyes of the receiver.” “delight has a price.”

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Establishing Measures Design a Proof of Concept • • • • • • • • •

Collect data Record data Review information Validate assumptions Check alignment with Business Plans Address logistical issues Refine and adjust measures Design reports (tables, graphs, wallboards, etc.) Verify that the message is received Infrastructure Management Group, Inc.

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Keep People Informed Design a Communication Plan before it’s too late. Consider a plan to keep people informed: • Who needs to know what? • When do they need to know? • What’s the message? • By whom should they be told, and how? Present the information in a manner that is easily interpreted

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Wall Placards Used to Communicate Progress Attendance

Peak Demand vs. Treatment Capacity Treatm ent capacity

Backlog of Important Work

Average

December

November

October

September

August

July

June

Electric Consumption

Lake Huron WTP - 2004

Lake Huron WTP - 2004 2,500 2,000 1,500 1,000 500

Average

December

November

October

September

August

July

June

May

April

March

January

February

0

Average

December

November

October

September

August

July

June

May

April

March

February

kWh per MG Treated

80 70 60 50 40 30 20 10 0

January

Employee Days

May

March

January

February

Peak dem and

Average

December

November

October

September

August

July

June

May

April

March

February

January

Lake Huron WTP - 2004

400 350 300 250 200 150 100 50 0

MGD

100% 98% 96% 94% 92% 90% 88% 86% 84% 82% 80%

April

Lake Huron WTP - 2004

Plant-to-Plant Comparison Attendance

Backlog of Important Work

WTP Plant-to-Plant Com parison - June 2004

Electric Consumption

Peak Demand vs. Treatment Capacity

WTP Plant-to-Plant Com parison - June 2004

WTP Plant-to-Plant Com parison - June 2004

WTP Plant-to-Plant Com parison - June 2004 500

80

100%

2,500

450

70

400

96%

60

92% 90% 88% 86%

80% Springw ells

Lake Huron

Waterw orks park

Northeast

240

250

225

210

155

150

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Southw est

300

200

30

0

Northeast

Springwells

125

120

130

100

10

82%

300

300

40

20

84%

Treatm ent Capacity

350

50 MGD

Employee Days

94%

Peak Dem and

380

Lake Huron

Southwest

Waterworks Park

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2,000

kWh per MG Treated

98%

1,500

1,000

500

50

0

Northeast

Springw ells

Lake Huron

Southw est

Waterw orks Park

Northeast

Springw ells

Lake Huron

Southw est

Waterw orks Park

Communicating Performance Measures in the Field

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Using Measures to Manage Improvement

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The Results Demonstrable Success

Annual rate increase, %

New Director

Performance Improvement Program Began

Actual Rate Increases Projected Rate Increases Capital Investment

Results Demonstrable Success • • • • • •

A set of validated, customer-focused performance measures for selected departments. Increased awareness of the value and proper interpretation of performance measures A trained staff that was familiar with the process of collecting and reporting performance measures. A validated and established process for collecting and reporting performance measures for selected departments. A proven process for success for moving forward with the next set of selected departments. A list of requirements for a long-term, software solution that leveraged the use of existing software systems, where possible, that minimized new capital costs Infrastructure Management Group, Inc.

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Questions and Discussions

for more information contact: [email protected]

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