Developing a Sustainability Management Plan for

LESAM 2007
2nd Leading Edge Conference on
Strategic Asset Management
Developing Sustainable Management
Plans for
Water Supply within Sarawak Malaysia
by Kerry Jones & David Cox
Developing Sustainable Management Plans for
Water Supply within Sarawak Malaysia
This presentation covers the outcome from using strategic asset
management approaches to develop sustainable long term
strategies for management of water supply services in Sarawak
Malaysia including the tools and techniques used to:
– Evaluate the current situation
– Identify the status of asset knowledge
– Identify future asset management requirements
– Develop business improvement plans
– Justify future asset management strategies
Sarawak???
Googled…
Sarawak Facts
• Capital is Kuching.
• Largest state of Malaysia (geographically).
• Joined Federation of Malaysia in 1963, after a
century of British Colonial rule.
• Population of Malaysia is 26.4mil and approx 2.4mil
in Sarawak.
• Indigenous tribal pop 44%, chinese 28%, other
28%.
• Official language is Bahasa Melayu also known as
Malay, however other languages are common,
English, Chinese & native indigenous languages.
• Major religion is Islam.
Sarawak Facts Cont…
•
•
•
•
•
•
•
'the land of the hornbill‘
‘the land of many rivers’
Abundance of natural resources, petroleum, natural gas.
Thick lush rainforests (timber), undulating landscape.
Large timber logging industry and;
Palm oil & sago plantations.
Tropical climate
Water Supply History
• 1887, Kuching obtained water direct from a nearby stream drawing
off about 100,000 gallons per day (0.45ML/d)
• 1902, an alternative source of supply was developed near Kuching.
A 3.5mil gal dam was constructed (15.75 ML).
• Demand from Kuching town increased to 500,000 gallons per day
(2.25ML/d).
• Raw water of a suitable quality supply could no longer meet growing
demand.
• 1957 first water treatment plant constructed 4ML/d, now 240ML/d
• Trend continued, Sibu, Mukah, Miri, Bintulu and Sri Aman
Water Authorities
• First established government body to co-ordinate and
facilitate water supply Jabatan Kerja Raya (JKR), Public
Works Department.
• 1959 Lembaga Air Kuching (Kuching Water Board) and
Lembaga Air Sibu (Sibu Water Board) took over JKR’s
responsibilities in Kuching and Sibu city.
• 1995 a State Water Authority was established.
• 1996 Lambaga Air Kawasan Utara (LAKU) took over other
growing cities water supply authorities, Miri, Bintulu &
Limbang.
• Currently JKR’s responsibilities includes 88 water supply
authorities for small towns, communities and villages
(kampangs)
Treatment Plants Ranging from 300MLD
ASSET MANAGEMENT TOOLS
• Workshops
• Total management planning
• Long-term financial modelling
• Organisational structural analysis techniques
• Key accountability documentation
• Activity analysis
Use of Total Management Planning to evaluate existing situation
and quantify asset centric business improvement strategies
Organisational
Alignment
GOVERNMENT OF SARAWAK
KWB
KWB/ /PWD
PWDSTRATEGIC
STRATEGICPLAN
PLAN
ANNUAL
ANNUALPERFORMANCE
PERFORMANCEPLAN
PLAN
Customer
CustomerCharter
Charter
Customers
Customers
Levels of
Service
Financial
Sustainability
Customer Service
Customer Service
1
OPTIMISED DECISION MAKING
BUSINESS
BUSINESSPLAN
PLAN
1
Drinking Water
Drinking Water
Quality Management
Quality Management
2
2
Financial
Financial
Management
Management
Plan
Plan
Financial
Forecast
3
POLICY
POLICYDOCUMENTS
DOCUMENTS
Asset
Management
Operations
Operations
Management
Management
3
Maintenance
Maintenance
Management
Management
4
5
4
Business Development
& Management
Environmental
Stewardship
Water Loss &
Water Loss &
Demand
Demand
Management
8
Management
8
Environmental
Environmental
Management
Management
Co-ordination
12
Co-ordination
12
Quality
Quality
Management
Management
Asset
Asset
Procurement
Procurement
Catchment
Catchment
Management
Management
Information &
Information &
Performance
Performance
Management
15
Management
15
5
9
9
13
13
KEY RESULT
AREAS
14
14
SUB-PLANS
Financial
Model
Asset Renewals
Needs Analysis
Infrastructure
Infrastructure
Planning
Planning
6
Asset Evaluation
Asset Evaluation
& Renewal
& Renewal
7
Water Source
Water Source
Management
Management
6
Energy
Energy
Management
Management
7
Risk
Risk
Management
Management
10
10
Corporate
Corporate
Systems
Systems
Management
Management
11
11
17
17
Human Resources
Human Resources
Management
Management
18
18
Asset
Register
External Social
Accountability KPIs
16
16
Financial & Asset Management
Sustainability KPIs
Asset Valuation & Depreciation Policy
Environmental
Sustainability KPIs
Internal
Accountability KPIs
TRIPLE
BOTTOM LINE
FRAMEWORK
Social
BALANCED
SCORECARD
Accountability
Framework ©
SUPPORTING DOCUMENTS / INFORMATION (e.g. Asset Register, Infrastructure Planning Studies, Life-Cycle Costing Procedures etc)
Financial modelling used to identify funding issues
Return on Equity
Dividend to Equity
Modified return on equity
Return on assets (EBIT)
Returns from the business
9.0%
8.0%
7.0%
6.0%
%
5.0%
4.0%
Capital Expenditure
3.0%
Assets
Total Assets
2.0%
1.0%
800,000
40,000
3
4
5
6
7
Years - 2000/01 is year 1
8
9
10
600,000
30,000
400,000
20,000
Retained profits
Income Tax
Dividend
Cashflow
Operating Profit
Cash Flows
200,000
10,000
40000
-
1
2
3
4
5
6
7
Years - 2000/01 is year 1
8
9
30000
10
$'000
2
$'000
1
Capital Exp. $'000
0.0%
20000
10000
0
1
2
3
4
5
6
7
Years - 2000/01 is year 1
8
9
10
CUSTOMER COMMITMENT
Use of Generic Activity Frameworks to
Evaluate Organisational Structures
ANNUAL PERFORMANCE PLAN
COMMERCIAL WATER SERVICES UNIT
ASSET OWNER GROUP
‘Contestable’
Asset Owner Group
• Customer Interface
• Investment Planning
• Total Asset Management
• Core Business Support
Services
‘Contestable’
SERVICE
PROVIDERS
S
L
A
OPERATORS
Facility Management
Groups
SLA
•Bulk Treatment
•Reticulation Operations
SL
A
Project Management Groups
• Construction Groups
• Capital Works Projects
• Major Periodic Maintenance Projects
• Planning and Design Groups
• Strategic Planning
• Network Investigation
• Project Management
• Development Areas
External Service
Providers
SLA
Business
Management
Services Groups
Management Framework
Council Provided
Services
Use of Key Accountability Documentation to
define all Relationships
Defined Relationships
Purchaser/Regulator/
Owner
Accountability
Service Provider
“
State Govt
Redefined in terms
of:
Owner
of CBU
·
·
Regulator
”
Roles and Responsibilities defined by:
Annual Performance Plan
Regulatory Framework
·
·
·
·
Customer Charter
Tax Equivalents
Debt Guarantee
Compliance with regulations
(Planning, Environment and Council)
Customer
Guarantee
Business Unit
Redefined in terms
of:
·
Customers
·
Shareholders
Supply Contracts
·
Suppliers
Benchmarking
·
Competitors
Business Plan
TMP
Marketing Plan
·
Service Provider
Service Purchaser
·
Full Cost Pricing
Service Level Agreements
CSO and SLAs
Supported by
Commercial Business
Systems
QMS IMS FMS
REGULATORY FRAMEWORK
Evaluation of Current Regulatory Arrangements
The most significant observation on the existing
regulatory framework was the absence of
requirements for: • asset management planning;
• infrastructure performance monitoring and
reporting;
• customer service performance monitoring and
reporting; and
• best practice governance framework for ownership
of long life assets.
We recommend that the existing regulatory
framework be enhanced through:
• mandating of asset management planning and auditing
of water supply agencies performance against their
asset management plans; mandating establishment of
customer service targets and annual performance
reporting;
• Establishment of a government agency responsible for a
water industry regulation including asset management
regulation;
• enhancement of the functions of asset ownership so all
State owned water infrastructure is managed for
performance and outcomes.
Recommended Organisational
Arrangements & Regulatory Framework
Existing
WB
KWB
Department
JKR
Water
Water
Supply
Supply
Branch
Branch
Existing
Existing
Support
Support
for
forSWA
SWA
Existing
Existing
Support
Support
for
forSWSCC
SWSCC
Recommended
State
StateWater
Water
Regulator
Regulator
Rural WS
New Regulatory Framework
Commercialised
Commercialised
State
StateGovernment
Government
Department
Department
Revenue
Revenue
Collection
Collection
Control
Control
Centre &
Centre &
Telemetry
Telemetry
Asset
Asset
Management
Management
Group
Group
Urban WS
Close to
Water Boards
Enhanced
Enhanced Kuching
Water
WaterBoards
Board
Control
Control
Centre &
Centre &
Telemetry
Telemetry
Planning &
Planning &
Construction
Construction
Group
Group
Asset
Asset
Management
Management
Group
Group
FINANCIAL SUSTAINABILITY
Each agency required a different financial strategy
250,000
Operating
Profit
200,000
capital
commitment
150,000
Cash Flow
Agency 1
100,000
Debt Level
50,000
CSOs
0
2004
Capital Grants
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
500,000
-50,000
Operating
Profit
-100,000
450,000
400,000
Agency 3
350,000
capital
commitment
Operating
Profit
300,000
250,000
1,000,000
Cash Flow
800,000
Agency 2
capital
commitment
200,000
150,000
Debt Level
600,000
100,000
50,000
Cash Flow
0
400,000
2004
-50,000
Debt Level
200,000
0
2005
-200,000
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
The Agencies have many Management Strengths:
• Capability of customer information systems and reporting
of customer information;
• Quality systems and use of 5S;
• Dedication of staff and management enthusiasm for
quality outcomes;
• Performance measurement;
• Use of variable speed pumping by zoned water supply
system Sibu Water Board;
• Use of WTP SCADA by Sibu Water Board.
However the Management Challenges
included:
• One agency currently operating in a cash flow
negative position;
• Public sector constraints and requirements from
permanent positions;
• Lack of management autonomy;
• Limited Mechanisms for ongoing review of tariff
and charges;
• X-subsidies from commercial to domestic;
• Expectations to extend systems into rural areas.
We concluded that Agencies could Improve:
• Asset Management and Total Life Cycle costing
approaches;
• Use of monitoring and telemetry;
• Trending analysis of data currently being collected in
particular analysis of reservoir level and pump station
data to identify NRW hotspots;
• Optimisation of energy consumption;
• Maintenance of telecommunications and SCADA
equipment;
• Network modelling and NRW capability;
• The level and hierarchy of infrastructure plans;
• Capital works planning capacity and capability.
Use of Organisational structural analysis
to identify areas for asset management
capacity improvement
Agency 1 Organisational Analysis
ANNUAL PERFORMANCE PLAN
CUSTOMER COMMITMENT
WATER SERVICES UNIT
ASSET OWNER GROUP
Asset Owner Group
Customer Interface
Investment Planning
Total Asset Management
Core Business Support
Services
Accountability
Accountability
Facility Management Groups
SLA
Reticulation Operations
Operations Centre, telemetry
and instrumentation
S
L
A
SL
Project Management Groups
Construction Program Managers
Capital Works Projects
Major Periodic Maintenance
Projects
Planning and Design Groups
Strategic Planning
Modelling
Network Modeling
Project Management
Development Areas
Bulk Treatment
A
Business Management
Services Groups
Finance
IT
HR
Administration
Metering
Security
Management Framework
External Service
Providers
SLA
Govt Provided
Services
Agency 2 Organisational Analysis
ANNUAL PERFORMANCE PLAN
CUSTOMER COMMITMENT
COMMERCIAL WATER SERVICES UNIT
ASSET OWNER GROUP
Asset Owner Group
Customer Interface
Investment Planning
Total Asset Management
Core Business Support
Services
‘Accountability’
PROJECT
SERVICE
PROVIDERS
‘Accountability’
Facility Management Groups
SLA
Bulk Treatment
Reticulation Operations
Operations Centre, telemetry
and instrumentation
S
L
A
SL
A
Project Management Groups
Construction Program Managers
× Capital Works Projects
× Major Periodic Maintenance
Projects
× Planning and Design Groups
× Strategic Planning
× Network Investigation
× Project Management
× Development Areas
×
OPERATORS
Business Management
Services Groups
Finance
IT
HR
External Service
Providers
SLA
Administration
Metering
Security
Management Framework
Govt Provided
Services
Any Questions???