CITY OF CUMBERLAND UTILITIES DEPARTMENT BECOMES COMPETITIVE THROUGH PARTNERSHIPS
Abstract:The last several decades have seen tremendous change for the City of Cumberland, Maryland. After being the center of western Maryland's commerce and industry for over 200 years, the economic and worldwide business forces, starting in the 1960s, closed the area's factories that supported the majority of its population.
The associated layoffs and terminations devastated Cumberland's residents and caused many to leave their homes to search for employment, shrinking the city's population from a high of 48,000 to 21,500 in 2000.
Meanwhile, Cumberland's city government, including the utilities department, faced the daily challenge of providing excellent customer service with shrinking revenue, while maintaining the infrastructure of a 300-year-old city designed to support a much larger population base. In the late '90s, in addition to the “normal” challenges facing the utility, one of the most aggressive contract operations and maintenance firms made a proposal to the Mayor and Council to take over all utility functions. Their proposal indicated they would be able to run the utility at 500,000 less annually than what the city was paying.
The leadership of the City's bargaining unit, AFSCME, and City management asked their elected officials to give City employees a chance to operate the utility as efficiently as the private firm offered to do. In other words, reengineer and become more competitive. The Council agreed, beginning the process that has resulted in significant changes to operating procedures and reduction in the cost of operations and maintenance.
The first step was to hire EMA, Inc., a specialized management and technology consulting firm, to provide an assessment of the true competitive gap. City management and union leaders selected a steering team of managers and employees to work with EMA. Using a unique facilitated self-assessment process, the Steering Team identified a “cost savings” gap (more than the privatizer offered) and additionally identified a further productivity increase potential gap, consisting of increased customer service and improved infrastructure and asset longevity that had not been targeted in the contract operations and maintenance offer.
The cost savings gap was only nine percent of the utility's controllable budget, a very small gap compared to the average 20+ percent gap of most utilities. Nonetheless, union and management offered to close the gap to zero, and the council agreed, funding a two- to three-year, consultant led, optimization project named C.U.R.E. (Cumberland Utility Revitalization Effort).
With employee involvement, flexible workers compensated through a skill-based pay program were developed in both treatment plants, as well as in the two infrastructure (collection and distribution) maintenance groups. A performance incentive plan is in development.
A new, flatter, organization structure, based on teamwork and empowerment, is effectively utilizing the new flexible workforce, while saving the ratepayers of Cumberland hundreds of thousands of dollars. The program's success has resulted in further optimization efforts in the Public Works Department of the City of Cumberland, with the Utility's program serving as a pilot for the new levels of performance and more competitive culture envisioned for all City employees.
Document Type: Research Article
Publication date: January 1, 2002
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