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Well-designed and properly implemented performance measurement systems can help utilities achieve new levels of performance in terms of efficiency, quality, and effectiveness. Interest in performance measurement is increasing in all competitive businesses and industries today, and has been advanced through concepts such as the Balanced Scorecard. Utilities can employ these same concepts and learn “best practices” from other industries' experiences.

A joint WERF/AWWARF research project (Developing and Implementing a Performance Measurement System) has been underway since mid-1999 to provide methods and tools that enable the utility to develop and implement a performance measurement system based on a demonstrated, proven approach. A Volume I Report (WERF 2000) summarizes the secondary research and project approach.

A modified version of the Balanced Scorecard (Kaplan & Norton, 1996) was selected as a basis for a performance measurement framework. This measurement framework along with a business process framework forms the basis for a performance measurement system.

A business process framework is required because the most appropriate measures are processbased, independent of a utility's unique organization structure. The business process framework was developed based on the Utility Business Architecture (UBA) (AWWARF, 1997) and the American Productivity & Quality Center's (APQC 1999) process classification framework.

The first phase of this project developed a set of “best practices” in performance measurement based on successful experiences in other industries. With these experiences and additional water/wastewater utility examples, a seven-step process to develop and implement a performance measurement system was postulated for proof by four pilot utilities.

Four utilities are piloting this process in their own unique circumstance (including one Targeted Collaborative Research program participant), to demonstrate how the process can be applied in a variety of utility types and situations. The utility pilots and their individual focus areas are:

Phoenix Water Services Department—utility-wide scorecard was developed and linked to an updated Department Strategic Plan. Implementation of scorecard goals, objectives, and measures is proceeding in two focus areas: managing maintenance at Union Hills Water Plant; and prevention of sanitary sewer overflows for the Department's “zero tolerance” compliance program.

Central Contra Costa Sanitary District—An initial plant operations scorecard was defined with identified key performance improvement areas. Additional development and implementation of this scorecard will align with the District's updated strategic direction.

Union Sanitary District—A treatment and disposal (T&D) process scorecard is focusing work teams on establishing targets and measuring performance. A refined District scorecard will link to process and team-based scorecards for an enterprise view of utility-wide performance.

Seattle Public Utilities—An updated strategic business plan will directly link measures from operational work plans and strategic initiatives to strategic business plan goals. Refinement of the existing organizational performance system will focus on balancing the types of measures as well as implementing “lines of business” measures.

Two of the pilot utilities, Seattle Public Utilities and Union Sanitary District, have previously implemented organization-wide performance measurement systems. All pilot participants have previously used performance measures in some areas. Therefore, this project demonstrates an approach that helps utilities begin to embrace or expand performance measurement, as well as those experienced or “up the learning curve”.

What makes performance measurement work? Utility examples, as well as secondary research of other industries, show that linking a performance measurement system (e.g., Balanced Scorecard) with a utility's strategic direction provides organizational alignment.

Developing performance measures for a utility's strategic and tactical initiatives (programs, projects, on-going operations) means that these initiatives will directly carry out and support a utility's strategic direction. The initiative's objectives, measures, and targets provide feedback on performance directly to work teams or individuals. With systematic performance feedback, these teams and individuals can make operational improvements. With a cycle of continuous improvement, utilities can reach new levels of performance for customers and public benefit.

A report of the utility pilot results will summarize the pilot implementations in terms of the individual utility's “lessons learned” as well as adjustments to the performance measurement framework, approach, or seven-step process. These reports from the “front lines” will show how other utilities can use a similar approach to implement successful performance measurement systems in their own organizations.
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Document Type: Research Article

Publication date: 01 January 2002

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