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Weekly UpdatesMany performance measurement programs help organizations discover how well a service is being provided, but they do not always inform the organization's stakeholders about what results are desired. Organizations also face difficulties in figuring out what process to use for achieving the desired outcome. The Albuquerque Bernalillo County Water Utility Authority (ABCWUA) uses a logic model to evaluate its operations and service delivery levels, determining if its performance measures are leading to the correct results.
Two fundamental questions a performance measurement system needs to address are "How well is the service provided?" and "What is the result of the service?" (1) These were the questions the ABCWUA faced when it was created in 2003. More importantly, the utility's governing board at that time also asked, "Where do we want to be?" and "How do we get there?" Because the organization was just starting out, it had the opportunity to develop its own goals and performance measurement system.
In 2004, the ABCWUA adopted a budget ordinance requiring that a performance plan be connected to the utility's long-range goals. The plan was to contain performance measures that would guide the operating and capital budgets in prioritizing and allocating the utility's financial resources. The ABCWUA wanted to use its performance measures to improve operational efficiency and effectiveness by identifying areas where quality improvement processes should be implemented, and to enhance decision making.
MEETING LONG-TERM GOALS
The performance plan is a component of the ABCWUA's strategic planning, budgeting, and improvement process, as shown in Exhibit 1. The annual operating and capital budgets are based on data from this process, which is used to set performance goals. Every fiscal year, the ABCWUA Board adopts one-year objectives, which are policy directives used to improve performance levels and meet both short-and long-term goals.
A good example of the integration between performance measures and objectives is employee lost time due to illness or injury. Since starting the benchmarking process, officials at the utility noticed that lost workdays were on average three times higher than at other utilities. (2) Excessive lost workdays affect productivity and can cost utilities in a number of ways, including adverse affects on health-care premiums, insurance premiums, and overtime pay. As a result, one of the recent one-year objectives was to reduce the number of employee lost days by 25 percent. To accomplish this objective, the ABCWUA implemented an improved light-duty program to get employees back on the job safely. This new process has provided a clearer understanding of what needs to happen when an injury occurs, including the documentation, payroll coding, and expectations for when injured employees will return to work. In addition, the utility created a $500 safety incentive bonus for all employees if they collectively met the goal of reducing injury lost time by 25 percent. The ABCWUA actually realized a 50 percent decrease in employee lost days during the last fiscal year, showing the organization is working smarter and safer.
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PERFORMANCE PLAN FRAMEWORK
The American Water Works Association (AWWA) QualServe Benchmarking Performance Indicators Survey comprises a significant component of the ABCWUA's performance plan. The survey allows water and/or wastewater utilities to collect and track data from previously identified and tested performance measures, based on the same collection process and definitions. The ABCWUA performance plan uses the survey data as a basis for tracking its performance year to year, and also to compare its performance with that of other utilities in its industry peer group (200 other utilities in the western United States, utilities that serve populations of more than 500,000, and utilities with combined water/waste water operations). The benchmarking data helps ABCWUA assess its performance relative to other high-performing utilities and identify gaps in service delivery or performance.
The organization of the utility's performance plan is based on ABCWUA's five-year goal areas, which are modeled after AWWA's QualServe business model. (3) The performance plan contains 23 performance measures. Goal statements summarize a set of related results or outcomes, as defined by desired community or customer conditions (see Exhibit 2).
PERFORMANCE PLAN LOGIC MODEL
The performance plan presents each performance measure through an evaluation logic model. The performance measures--which are categorized by quality, effectiveness, and efficiency--quantify what is being done (inputs), how well it is being done (outputs), and why it is being done (outcomes). Inputs are the specific data needed to construct and calculate each performance measure. These resources may include dollars, hours, people, or material resources used to produce an output. Outputs are the product of calculating the inputs, and they describe the level of effectiveness of each performance measure. The outputs are the metrics that are benchmarked with other utilities. Outcomes are the desired result the utility would like to achieve from each performance measure in connection with its five-year goals and one-year objectives.
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The performance measures are used to help monitor the ABCWUA's performance and to develop performance targets. The utility sets performance targets that are aligned with the desired outcomes to determine how effective or efficient the organization is in achieving the desired outcome. The ABCWUA uses the desired outcomes to create an ongoing discussion with its stakeholders and show why decisions are made in prioritizing and allocating financial resources. Overall, the logic model is used to show where the organization wants to be and how it can get there.
Exhibit 3 shows the logic model for the Distribution Water Loss (4) performance measure. The model shows three years of actual prior year data (FY05 through FY07), which establishes a baseline, and it includes the estimated current fiscal year performance measures (FY08) as well as projected performance in the proposed budget year (FY09). This performance measure is important because water loss has an impact on revenues. Tracking water loss helps water system managers understand the condition of distribution system infrastructure and the effects of its operation, maintenance, and replacement practices.
Exhibit 4 shows how the ABCWUA performs in distribution water loss, compared with the industry peer group. The ABCWUA's performance for this measure is within the lower median range, when compared with combined water/sewer utilities and with utilities serving areas with populations of more than 500,000. But it still has a lot of ground to cover, when compared to utilities located in the western United States. Over the past year, the ABCWUA has developed a leak detection program based on a one-year objective that focuses on finding water line leaks before they surface, fixing leaking hydrants, and improving meter accuracy. This program will help move the ABCWUA's performance in line with utilities in the western United States, where water is a relatively scare resource.
The Distribution Water Loss performance measure is an example of developing objectives to help improve performance in an area. The ABCWUA moved from asking "How many leaks are repaired each year?" to 'Are we improving the condition of the water distribution system, meeting service level needs, and becoming more efficient with water distribution?" In a 2008 customer opinion survey, a little more than half of the customers said that they were either very or somewhat satisfied with the condition of the water lines, as far as the number of leaks they observe. Balancing operation performance and meeting customer expectations is a difficult process, but if the ABCWUA expects its customers to conserve water by fixing leaks in their homes, then the utility needs to make sure its own house is in order.
PERFORMANCE ACCOUNTABILITY
A performance measurement program cannot succeed without the support of elected officials and key managers. At the ABCWUA, division managers are responsible for their respective goal areas and objectives, and for tracking their performance. Once a month, the executive director meets with the division managers and their staff to review progress reports on the performance measures and objectives. The ABCWUA Board receives quarterly status reports on the one-year objectives and annual reports on the performance plan.
The utility also conducts customer opinion surveys that allow it to track customer satisfaction on the programs, policies, and operational performance of the organization. Several survey questions are tied to the performance measures and levels of service, so the survey provides qualitative data that relates to quantitative data from the benchmarking effort, ensuring that the ABCWUA is balancing performance improvement with customer expectations. Survey results are presented to the board biannually
The annual budget review is another area where the ABCWUA uses performance measures and performance targets to improve accountability The executive director and the managers integrate performance reporting with the budget process to focus the budget discussion on allocating resources and addressing performance gaps. Budget requests are based on either performance measure targets or objectives. Integrating the objectives and performance measures into the budget process has moved the ABCWUA from simply measuring performance to managing performance. As a result, the utility has become more transparent and accountable to its customers and governing board.
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