Benchmarking water services delivery: https://www.linkedin.com/in/maarten-blokland-b7069914/detail/overlay-view/urn:li:fsd_profileTreasuryMedia:(ACoAAALy5EQBXJuRCFV6VCP_m6EThQ2fiXbnLeY,1602173837057)/
All the definitions of benchmarking emphasise that in order to achieve enhanced levels of performance, one must be ready to learn from others. One author defines benchmarking as “setting goals by using objective, external standards and learning from others – learning how much and, perhaps more important, learning how”, while another one states that benchmarking is a “systematic way to identify, understand, and evolve superior products, services, designs, equipment, processes and practices to improve an organisation’s real performance” and describes the approach as a “never-ending discovery and learning experience”.
Benchmarking originated in the manufacturing industry in the 1970s as a strategic tool to stay ahead of competitors. After some time, benchmarking also entered the public domain where it is increasingly being used by regulators, national and local governments and public enterprises as a means to enhance both the transparency and the performance of public services. The water and sanitation sector is very much a local natural monopoly with no direct possibilities for competition, unlike other network industries. This is caused primarily by the huge costs of transporting water over large distances and the impossibility to use the network for other purposes.
The attempts in the early 1990s to privatise the sector (asset sales) and to promote private sector participation did not result in the anticipated large-scale reform of the industry. The large majority of water utilities is still in the public domain. This particular characteristic of being a local natural monopoly in combination with public pressure demanding for improved performance of public sector agencies actually provides a window of opportunity for water utilities to engage in benchmarking. Hence water utilities have been involved in benchmarking since the 1990s and water utility benchmarking is now a common, worldwide activity.
The International Water Association (IWA) has played a key role in promoting benchmarking. IWA defines benchmarking as “a tool for performance improvement through systematic search and adaptation of leading practices” and producing separate benchmarking manuals for water utilities and for wastewater utilities. The manuals propose performance indicators (PIs), provide a rationale for performance assessment and promote the adoption of a system of PIs. IWA publications stress the importance of arriving at a system of PIs but warn against PIs becoming a goal in themselves. The PI system must be determined by each utility, based upon its own management strategy and objectives. After determining objectives, required activities and critical success factors, the appropriate PIs can be identified. The IWA also stresses the need for integral performance assessment including as main perspectives: financial, customer, processes and learning.
Water utility benchmarking initiatives have been carried out in a number of countries. Some of the initiatives have been reported on, notably those in Austria, Brazil, Canada, China, Denmark, Egypt, Germany, Hungary, Kenya, Indonesia, Moldova, Portugal, South Korea, Switzerland, The Netherlands, Tanzania and Zambia, and so have some regional and global initiatives such as the North European Benchmarking Cooperation (NEBC) supported by the region’s water associations, EurEau for the member states of the European Union, the Water Utility Partnership for Africa and the IB-Net global database, both supported by the World Bank, the South East Asian Water Utility Network and the Water Utility Benchmarking System of the Pacific Water and Waste Association (PWWA), respectively supported by the Asian Development Bank and the Pacific Region Infrastructure Facility, and the benchmarking exercise of ADERASA, the Association of Latin American Regulators of Water and Sanitation Services.
The experience with water utility benchmarking in developing economies is recent and more limited and it is still a challenge to promote the concept and to initiate and develop benchmarking systems that are feasible and relevant considering the specific context in which utilities in developing countries operate. Exercises to directly apply conventional benchmarking schemes from industrialised economies to developing countries are likely to fail for many reasons including differences in the availability and reliability of data, inadequate capacity to draw lessons and implement related changes, different organisational objectives and cultures, a different customer base and demands, different cost structures and revenue potential, and last but not least, resource constraints that hinder the implementation of performance improvement measures. These differences may be such that the application of conventional benchmarking schemes proves entirely impracticable or that certain key PIs are less relevant or need to be defined or interpreted differently.
One example of the latter is the indicator for labour productivity expressed as number of fulltime equivalent staff per 1,000 connections. In developed economies the relatively high labour costs and the availability of highly skilled staff in combination with the easy access to and the relatively low costs of advanced technology are providing a steady and continuous drive to automate and computerise utility operations resulting in a perpetual reduction of this indicator to values around 1.0 or below. In developing economies the context is entirely different; here lower labour cost and skills combined with less access to and higher costs of advanced technology plus a (political) need to provide employment opportunities give an entirely different set of drivers that may result in values for the labour productivity indicator that are appreciably higher than the values achieved in developed economies. This implies that the business processes that achieved the higher levels of productivity in developed country utilities may not be or may not all be so relevant for adoption in developing economy utilities. Another example is that of services provision to the poor which is not much of an issue for utilities in developed economies but a major challenge for utilities in developing countries.
Nevertheless, also in developing countries benchmarking may contribute to improved performance of participating water utilities. For example, in the Pacific the efforts to introduce Benchmarking among Pacific Water Utilities by the PWWA have been evaluated. It appeared that, among others, several water utilities were able to substantially reduce Non Revenue Water resulting in considerable cost savings, which they could partly attribute to lessons learned from other utilities as part of the benchmarking process.
