From Good to Great: Transforming Public Utilities with Effective Utility Management
by Gary Jackson, Client Services Manager
Challenges faced by Public Water and Wastewater Utilities
Today’s water and wastewater utilities face a broad range of complex challenges. The challenges include regulation requirements, rising costs and customer expectations, aging infrastructure, growth and expansion pressures, and rapidly evolving technology. At the same time, they need to be prepared to respond to emergencies and ready to effectively operate in variable climate conditions. Achieving viable water utilities across North Carolina requires actions by the state, local governments, and water utility providers to ensure that, to the greatest extent practicable, water utilities operate effectively and efficiently as enterprise systems.
Every utility needs a common sense and proactive approach to meet the basic challenges of generating sufficient revenue to cover all operating, maintenance, and capital expenditures, as well as funding reserves for unexpected events. Strategic planning for local governments, as traditionally known, is designed to establish a set of strategic priorities for the entire municipal or county organization. They are not designed for strategic planning focused on the complex challenges specific to public utilities.
A more effective approach for public utility management is to apply the Effective Utility Management model to establish a Strategic Business Plan for their organization. This practical guidance is developed by the American Water Works Association (AWWA), the American Public Works Association (APWA), the U.S. Environmental Protection Agency, and other collaborators.
Basic Elements of the Effective Utility Management Model
The Effective Utility Management model provides a utility specific framework for decision-making, assessing current conditions in a collaborative way, prioritizing goals, and establishing a strategic business plan with action plans for achieving goals. Public utilities that have developed their management capacity using this approach are far more likely to be prepared to meet challenges, protect public health, and maintain organizational and financial stability in an uncertain future.
The Effective Utility Management model is an approach designed by water sector leaders for water and wastewater utility managers. The approach is based around the Ten Attributes of an Effectively Managed Utility and Five Keys to Management Success – known as Effective Utility Management (EUM).
Five Keys to Management Success
The five keys to management success, as established by water sector leaders, are:
The basic elements of strategic planning are vision statements, strategic planning priorities, and goals and objectives.
Leadership: Is crucial to inspire change within an organization and effective leadership establishes and communicates a long-term vision and embodies commitment to culture and methods extending the vision into day-to-day operations.
Strategic Business Planning: Provides a framework for decision making, assesses current conditions in a collaborative way, prioritizes goals, and establishes action plans for goal achievement.
Knowledge Management: Spans standard operating procedures, human resource management, operating systems, and data integration and utilization to support dependable operations and continual improvement.
Measurement: Is critical to improvement efforts. The management measurement adage is, “If you can’t measure it, you can improve it.” So, the backbone of a strategic business plan measurement clarifies expectations, facilitates decision-making, supports learning, establishes, maintains accountability, and most importantly, communicates effectively internally and externally.
Continuous Improvement: Is the inclusive process, with staff engagement, to identify strengths to be reinforced and opportunities for improvement. It is the development of a culture committed to quality customer service, staff development, and sustainability of organizational performance.
Ten Attributes of Effectively Managed Utilities
The Ten Attributes of Effectively Managed Utilities provide practical guidance for utility managers seeking to set goals for organization-wide performance. The attributes are a comprehensive framework related to operations, maintenance, infrastructure and plant performance, financial performance, customer satisfaction, community sustainability, and natural resource stewardship.
Product Quality: Producing products that meet or exceed full compliance with regulatory and reliability requirements, and consistent with customer, public health, and economic needs.
Customer Satisfaction: Ensuring customer satisfaction involves providing reliable and affordable services that align with the customer’s demands. Additionally, delivering timely alerts and effective customer communications during emergencies is essential.
Stakeholder Understanding and Support: Engendering understanding and support from anyone who can affect or be affected by the utility.
Financial Liability: Establishing and maintaining predictable rates consistent with community expectations and adequate to recover costs, provide reserves, and plan/invest for future needs.
Operational Optimizations: Minimizing resource use, impacts from operations, and making effective use of data from performance monitoring systems.
Employee and Leadership Development: Recruiting, developing, and retaining a workforce that is competent, motivated, adaptive, collaborative, and safety focused.
Enterprise Resiliency: Ensuring utility managers, supervisors, and staff work together intentionally, and coordinating with external partners/stakeholders to anticipate, respond to, and avoid problems.
Infrastructure Strategy and Performance: Maintaining and enhancing the conditions of all assets over the long-term at the lowest possible life-cycle cost and regulator supported service levels.
Community Sustainability: Managing operations, infrastructure, and investments to support economic, environmental, and social health of its community, integrating water resource management with other critical community planning efforts.
Water Resource Sustainability: Engaging in long-term planning to ensure the current and future ecological water-related needs are met.
Developing a Strategic Business Plan for Your Utility
By assessing how your utility performs relative to the Ten Attributes, you can gain a balanced, comprehensive picture of the organization and determine where to focus improvement efforts. Based on documented studies (Orange County NC Water and Sewer Authority and Lehigh, Pennsylvania County Authority), the best practice is to build a strategic plan focused both on attributes deemed most important and attributes in most need of improvement.
A rigorous and systematic self-assessment tool is utilized in the EUM model to accomplish this objective. The tool is a self-assessment survey which asks employees to (1) rank each attribute in terms of current and future importance, and (2) grade how well the organization is currently performing in each of the ten attributes.
Facilitating the Self-Assessment Process
McGill assisted the Town of Siler City in performing a self-assessment process and establishing priorities for their water and wastewater utilities. The Siler City experience was invaluable in establishing strategic priorities, short-term and long-term goals for an organization facing regulatory and development pressures. In 2022, Siler City employees identified product quality (and regulatory compliance), customer satisfaction, and operational optimization as their highest priorities.
Learn More
To learn more about McGill’s work with Siler City and their strategic business planning process, reach out to Gary Jackson, Client Services Manager, at gary.jackson@mcgillassociates.com or 919.378.9111.
