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HomeMy WebLinkAboutCompetitiveness Assessment Augusta Richmond GA DOCUMENT NAME: tDr'(I\x=\'\t.,'\J e_rle-~ S ()S ~5 men-\- DOCUMENT TYPE: y~)(-\- YEAR: C\B BOX NUMBER: Ol\ FILE NUMBER: \ ~L' ~ --\ NUMBER OF PAGES: l.d1 eo_petitiveness Assess.ent Report . EMA Servicd!S. Inc. Linking People & Technology for Business Results ~ 1998' .,. ," . .' ~ " . .. , , , ,,' " " - - - ,", ,;. .J' .,- .... .'. .. .. .... . .., "". .."" . ..... .P\5409010 AUGUST AIREPORT\IT ABLE OF CONTE\010998\MGW I I I I I I I I I I I I I I I I I I I 2 Table of Contents I ntrod uctiol1 Background....."....................................................................................................... 2 1 Executive Summary Business Practices......................................................................................... .......... 1-1 Technology............................................................................................................. 1-2 Skill Based Compensation and Work Force Flexibility......................................... 1-3 Conclusion.............................................................................................................. 1-3 Com petitiveness Strateg ies Innovative Strategies Ensure Success..................................................................... 2-1 1. Total Productive Operations (TPO) .........................................................2-1 2. Planned Maintenance vs. Reactive Maintenance..................................... 2-1 3. Unattended Operations. ............ ...................... ......... ....................... ......... 2-2 4. Work Foree Flexibility (WFF)......................... .......................... ..... ......... 2-3 5 . Technology As Strategy...................................... ..................................... 2-5 6. Organization As Strategy....................... .................................................. 2-5 Getting Started on the Right Path ........................................................................... 2-6 - i . EMA Services, Inc. -PI5409010 AUGUSTAIREPORT\ITABLE OF CONTEI010998\MGW I I I I I I I I I I I I I I I I I I I 3 4 Observations Utility-Wide Observations...................................................................................... 3-1 Water Treatment Observations............................................................................... 3-2 Construction and Maintenance............................................................................... 3-3 Engineering Services.............................................................................................. 3-3 Wastewater Treatment Observations................................................................ ...... 3-3 Customer Service Observations.............................................................................. 3-5 Cost Savin~Js and Calculations Non-O&M Cost Savings Opportunities.................................................................. 4-3 Serial Work Processes....... .... ............ ........... .... .............................. ......... .......4-3 Use of Cross Functional Teams................................. ............................... ..... 4-3 Duplication of Effort (Over Checking and Inspecting) ................................. 4-4 Use of Technology (Island, Re-entry, SILOS) ..............................................4-4 Strong Top-Down Culture .............................................................................4-5 Specialty Silos Prevalent (Not My Job)......................................................... 4-5 Formal Cross Training Program (Work Force Flexibility)............................ 4-5 Inflexible Technical Standards Imposed (Not the Way We Do It)................ 4-6 Old Outdated Policy and Procedures Impediments (Budgets, Time Keeping, etc.)........................................................................................ 4-7 Culture Impediments (Fears, Punishments, Disrespect, Split Value Camps, No Customer Consciousness)................................................. 4-7 Quality of Work Products (Generally External or Internal Customer I)riven)........................................................................................... 4-8 - ii " EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Management of Load (Do the Right Things Right) Service Level Agreements............................................................................. 4-8 Outsource Strategy......................................................................................... 4-9 Routine Customer Feedback Acquired.......................................................... 4-9 Non-O&M Cost Saving Results........................................................................... ..4-10 Technology as Strategy to Reduce Costs.......................................................4-11 Organization as Strategy....................................................... ........................ .4-11 Summary of Non O&M Gross Savings .........................................................4-12 Lost Productivity for O&M - Water Treatment Plant.............................................4-13 Total Productive Operations........................................................................ ..4-13 Unattended in Off-Shifts............................................................................... .4-13 Program Driven Maintenance ... ...... ...... ..... ........................................ ............4-14 Work Force Flexibility................................................................................. ..4-14 Technology as Strategy to Reduce Costs..................................................... ..4-15 Organization as Strategy.................................................... .......................... ..4-16 Summary of Water Treatment Gross O&M Savings.....................................4-17 Lost Productivity for O&M - Wastewater Treatment.............................................4-17 Program Driven Maintenance............................................ .......................... ..4-17 Work Force Flexibility.................................................................................. .4-18 Technology as Strategy................................................................................. .4-18 Organization as Strategy............................................................................... .4-19 Summary of Wastewater Treatment Gross O&M Savings............................4-20 Lost Productivity for O&M - Construction & Maintenance...................................4-20 Total Productive Operations....................................................................... ...4-20 -P\540901D AUGUST AIREPORT\IT ABLE OF CONTEID109981MGW - iii - EMA Services, Inc. .PI5409010 AUGUSTAIREPORT\ITABLE ::JF CONTEI010998\MGW I I I I I I I I I I I I I I I I I I I 5 Unattended in Off-Shifts................................................................................ 4-20 Program Driven Maintenance ................. ....... ............ .......... ....... ....... ....... .....4-21 Work Force Flexibility.................................................................................. .4-21 Organization as Strategy.............................................................................. ..4-22 Summary of Construction and Maintenance Gross O&M Savings ...............4-22 The Competitiveness GAP: Summary of Gross Savings........................................4-23 Recommendations Recommendations Have Three Focus Areas .......................................................... 5-1 Addressing the Business Practice Issues Will Foster a Culture of Competitiveness Awareness............................................................................... 5-1 Implementation of Technological Solutions Will Improve the Bottom Line...................................................................................................... 5-2 The Skills (and Consequently) Compensation Levels Will Require Upgrading to Support the New Practices................................................................ 5-3 Recommendations................................................................................................... 5-3 1. Stategic Business Plan .............................................................................5-3 2. Water and Wastewater Treatment............................................................ 5-5 3. Construction and Maintenance................................................................ 5-6 4. Custonler Service.................................................................................. ... 5-6 Appendices A. Assessment Presentation - iv - EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Introduction Water and wastewater utilities are facing rapidly increasing financial pressure driven by aging infrastructure, increasingly more stringent regulatory constraints, and consumer demands. Added to these pressures has been the threat of contract operations, wherein a private operating company proposes to perform similar functions at a savings to a City or County. All of these pressures have motivated more progressive publicly- operated. utilities to determine how they could benefit by adopting revised management practices and philosophies to improve productivity and hold the line on controllable costs. Augusta-Richmond Utilities Department (the Utility) took an important step in the summer of 1997 when EMA Services, Inc., in cooperation with the Utility, conducted a Competitiveness Assessment. The purpose of the assessment was to determine potential cost savings opportunities if the Utility implemented best industry management philosophies, practices, and technologies currently applied by several large European and domestic contract operations firms. The assessment effort included: . Structured interviews with certain Utility personnel to determine current work practices and to quantify costs associated with those practices. . Independent analysis and comparison between the Utility's current situation and the private European approach. . Presentation to Utility staff members of the six significant strategies used by European utility managers. . Prest:ntation to and discussion with a select group as to how the stratt:gies could be applied to the Utility's operations. . Preparation of this report outlining the results of the assessment including implementation recommendations. This report contains the following information: . Section 1, Executive Summary. An overview of the purpose for the work and its principal findings and recommendations. -PI5409010 AUGUST AIREPORT\III01 09913\MGW - 1 - EMA Services, Inc. I I I I I I I I I I I I I I I I I I I . Section 2, Competitiveness Strategies. EMA has identified six major strategies upon which the most efficient utilities in the world base their operations, maintenance, organization, and business practices. This section describes these strategies. . Section 3, Observations. This section documents the observations made by the EMA assessment team both through a detailed desk audit of documents supplied by the Utility and on-site observations made while interviewing staff members. . Section 4, Cost Savings and Calculations. Section 4 documents the opportunities for savings within the Utility according to the applicable assessment strategies. The calculations include savings opportunities in both labor and equipment costs. The Utility's overall performance gap is calculated at the end of the cost savings. . Section 5, Recommendations. The recommendations resulting from this assessment are included in this section. Appendix A, Assessment Presentation. Appendix A contains a copy of the overheads that were used in the assessment presentation in August 1997. Background This Operations and Maintenance Business Process and Management Assessment Report was prepared to present the results of EMA' s evaluation of the Augusta-Richmond Utilities Department. The O&M review was based on comparing the Utility's operation against the six competitiveness strategies that contribute to significant operating efficienc:y. These paradigm strategies are noted below and are explained in detail within Section 2 of this report. In analyzing the treatment plants, the approach used is a hybrid of the methodology employed by two privatizers: PSG and US Filter (EOS). The numbers generated for the Utility are aggressive but closely match those which PSG and EOS have been submitting in their proposals and actually accomplishing at their contracted locations. It is important to note that however difficult it may appear to achieve the savings noted in the report, it is just this level of cost reduction that is being sought by the most aggressive privatizers. As such, the numbers generated by EMA's analysis represent a real world picture of the Utility's competitive posture. -P\540901D AUGUST AIREPORT\III010998\MGW - 2 - EMA Services, Inc. I I I I I I I I I I I I I I I I I I I It is equally important to note that the privatizers' numbers and staffing levels do not have to be matched. It is not the Utility's goal to eliminate the competitiveness gap but, rather, to reduce the gap to the point that privatizers find the Utility too great a risk for too small a reward. At that point, Augusta-Richmond will be operating in the most cost effective manner while maintaining customer service at the excellent level desired. The Utility has expressed the opinion that reducing the water treatment staff to 15 appears difficult and has asked EMA for an idea of how the plant could be operated with so few employees. EMA agrees that considering the state of the current technology and organization, the plant requires more than 15 people. However, should the Utility invest in the technology, training, and organizational changes recommended, 15 people would be optimal. The staff would be deployed as follows: . Off-shifts: 2 people per shift and 2 people for relief = 8 One person located at the surface plant overseeing that facility and all other facilities via SCADA. The second person's time would be divided between the raw water pumping station and the ground water plant. . Week days: 2 people at each of3 facilities + 1 relief = 7 The two people at each plant would be involved primarily In maintenance tasks. EMA is recommending an aggressive, highly automated solution. The recommendation also requires a team based organization without numerous levels of supervision. The goal is difficult but attainable, given the technological and organizational support required. In conjunction with a review of the O&M practices, the EMA team conducted a Management Assessment focusing on the administrative functions of the Utility. This review was based on a non-O&M, 14 point criteria sl::ale for quantitative measurement of performance. A summary of these criteria can be found in Section 4 of this report. Prior to the site interviews, EMA team members analyzed information provided by Utility staff. This desk audit included information regarding operations, maintenance, financial, and organizational conditions pertaining to the current Utility status. Prepared with this information, the EMA team arranged on-site interviews with 16 key Utility staff for additiona.l data collection and insights into the current business practices. The interview and desk audit findings are summarized below and detailed in Section 3 of this report. .P\540901D AUGUST AIREPORT\IIID1 099!1\MGW - 3- EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Following five days of interviews and analysis, EMA conducted a workshop with Utility staff members to present our preliminary findings. Additionally, the workshop provided an informal situation for staff to comment and provide input on the findings. During the presentation, EMA submitted calculations for determining the percentage of competitive "gap" between the Utility and contract operated utility systems. Section 4 of this report details the cost savings and calculations applied to the O&M and non-O&M (administrative) departments of the Utility. The remainder of this report contains the detailed strategies, observations, calculations, and recommendations originally presented in the Competitiveness Assessment presentation. -P\5409010 AUGUSTAIREPORT\I~01099Il\MGW -4- EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Section 1 - Executive Summary The Competitiveness Assessment of the Augusta-Richmond Utilities Department (the Utility) conducted by EMA has resulted in recommendations which provide the Utility substantial opportunities to achieve the maximum benefits from the consolidation of the former City and former County facilities. The Utility is a well managed organization using the recent merger to provide the impetus for a long term program of improvement in effectiveness and customer service while keeping rates at competitive levels. This assessment, or evaluation, of the Utility's current practices compared to the "best" practices in the industry is the first step in the program. EMA's recommendations to the Utility are grouped into three areas: business practices, the use of technology, and skill and compensation levels. The grouping is for convenience only. Many of the business practices require technology for support and a better trained and compensated work force to implement. The recommendations should be considered a long term plan to achieve the maximum benefits from the consolidation and to provide the operating efficiency necessary to sustain growth and explore new opportunities. Business Practices Accepting and acting upon the business practices recommendations will provide the benefits noted in this report because the integration and modernization of the customer service function will be facilitated, maintemmce will be performed in a more eost effective manner, and the development of performance measures agreed upon by all will result in a more focused work foree. The Customer Service function can achieve gross savings of $470,000 by changing current practices. In addition to the cost savings, the recommendations also allow greater emphasis to be placed on serving all the Utility's customers and doing so in a planned manner. The shift in emphasis toward planned customer interaction initiated by the Utility cannot readily be quantified but has substantial benefits in employee morale and customer satisfaction, parameters of concern to management and the overseeing municipality. -P\5409010 AUGUST AICDW-ALO\IS1-EXECI010998\MGW 1 - 1 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I The recommendations for program driven maintenance will result in better asset care and management. Cost effective maintenance is achieved by employing only the necessary maintenance resources and by establishing a manual of standard operating procedures based on "doing the right thing at the right time." Developing performance measures will assist in bringing the organization together by providing a shared sense of purpose. The Utility will benefit by having the employees aligned and working toward the organization's goals, and the employees are much happier working in an environment that values their participation and contribution. Technology Implemt:nting new technology will improve the performance efficiency at the Utility's treatment plants, generate substantial maintenance savings, and provide needed support for changes in Customer Service. The treatment plants will generate gross savings of more than $500,000 in operations, chemicals, and energy from the introduction of a process control system. The current level of such automation is below average for facilities of a similar size. Due to the current situation, savings may be achieved quickly through process control automation in the treatment plants. The introduction of a Computerized Maintenance Management System (CMMS) will improve resource allocation, reduce parts inventory, and improve decision making and equipment performance. Coupled with altered maintenance practices, as noted above, the potential CMMS-related gross savings are greater than $600,000 per year. The application of technology will permit the Utility to consolidate the separate and unconnected billing and customer systems, which require the Utility to maintain more locations and people than would be the case using a single system. Gross savings are calculated at over $120,000 per year. Additionally, customers could be offered options on where and in what manner payments are made. The benefit to the Utility will be even greater if a new system is chosen after the current work practices have been reviewed and improved. -P\5409010 AUGUST AICDW-ALOIIS 1-EXECID1 0998\MGW 1 - 2 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Skill Based Compensation and Work Force Flexibility More efficient work practices supported by new technology will require a different skill set from what is currently available at the Utility. Determining what skills will be required will enable the Utility to create the training programs needed. Employee participation in the skills inventory will improve buy-in and acceptance of the effort. EMA has recently assisted another utility in the successful implementation of an SBC and WFF program. That utility, which had a 22% Competitiveness Assessment gap, virtually closed that gap by instituting SBC and WFF. The savings were greater than forecast because of the power of the concept and the excellent implementation work on the part of the utility. A similar success is possible for Augusta-Richmond Utilities. Conclusion EMA has recommended several projects to be undertaken by the Augusta- Richmond Utilities Department. These recommendations have been made after an analysis of the Utility's practices compared to the "best" practices in the industry. The recommendations are made in the context of a Master Business Plan to carry the Utility for the next three to five years. By accepting and implementing the recommendations, the Utility will be able to maximize the benefits from the recent consolidation and generate gross savings of $3.15 million per year to provide the funding for the technology, training, and compensation necessary. The net savings realized will depend on the final cost of the new technology implemented, employee training, and the increased compensation for the retrained employees. -P\5409010 AUGUST AICDW-ALOIIS 1-EXECI01 0998\MGW 1 - 3 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Section 2 - Competitiveness Strategies Innovative Strategies Ensure Success Through experience working with many utilities, including large, private European utilities, EMA has identified six major strategies in which European and United States utilities differ. These six strategies, or paradigms, are what provide European companies and their American subsidiaries significant cost advantages. The strategies are: 1. Total Productive Operations. 2. Planned Maintenance versus Reactive Maintenance. 3. Unattended Operations. 4. Work Force Flexibility. 5. Tedmology as Strategy. 6. Org,mization as Strategy. Each of the six strategies were applicable to the assessment of the Augusta-Richmond Utilities Department and are described below. 1. Total Productive Operations (TPO) In the United States, utilities have traditionally organized around two distinct work groups: Operations and Maintenance (O&M). The Total Productive Operations (TPO) strategy eliminates this distinction by changing the dual "O&M" work force emphasis to a combined group performing continuously improved, foeused operations and maintenanee tasks. Operators no longer "watch and wait" for problems to occur. Instead, everyone in a single work force has maintenance assignments to complete while process monitoring and control technology alert certain maintemmce personnel to process deviations and alarms. 2. Planned Maintenance vs. Reactive Maintenance Many United States utilities operate in a "reactive" maintenance mode with the "if it isn't broke, don't fix it" philosophy predominating. The Planned Maintenance strategy focuses labor resources on planned, -P\5409010 AUGUST AIREPORT\IS2-STHA TEI01 0998\MGW 2 - 1 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I preventive, and predictive activities while confining reactive maintenance to a small fraction of all maintenance performed. Materials and inventory management are synchronized with planned equipment overhauls, reducing or eliminating travel time and other similar dead time components typical of the reactive maintenance philosophy. When properly implemented and supported with integrated information systems, the Planned Maintenanee management philosophy can save up to 40 percent of labor costs normally assoeiat,ed with the reactive approach for the typical United States utility. 100% ~ 80% ~ c: 'm ~ 60% - 0 Ui 0 40% 0 20% ~ ~ , ~I ~' '~ ~,"",'_ 0... .....C' " Vi'/, 20% 40% 60% 80% 100% level of Maintenance in Advance of Failure Figure 2-1: level of Work Planned in Advance of Equipment Failure The curve in Figure 2-1 shows the relationship of the total cost of maintenance to the percentage of work that is planned in advance of equipment failure (vs. reactive maintenance, which waits for things to break). This curve has been developed from maintenance experience in both the private and public sectors and is the model used by private European water companies as well as by United States privatizers. The graph shows that if a utility is in a highly reactive mode, maintenance costs can be cut by 40 percent at the optimum level, at which 75 percent of maintenance work is planned in advance. The reason for these savings is that planning maintenance in advance reduces waiting time for parts, crafts, and other resources which in turn increases "wrench on bolt" time. 3. Unattended Operations Today, major European facilities often run "unattended" or, at least, in the absence of operations personnel specifically assigned to wait and watch for process deviation and alarms, especially during "off' shifts. By .P:\5409010 AUGUSTA\REPORT\\S2-S11~TE\0109981MGW 2-2 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I contrast, in North America, most major water and wastewater treatment facilities run fully attended by staffs of operators waiting and watching for process deviation and alarms. The driving elements creating the difference between these two philosophies are the perceived risks associatl~d with process deviations and the perceived level of reliability of the process automation technologies deployed. Profit motive has provided powerful incentive for the private European companies to move beyond conjecture and experimentation to full impleme:ntation of unattended operations despite initial perceptions of risk and unrdiability. Of course, this depends on the type of process and level of automation employed at the facility. Regardless, in all cases, these companies have been successful in reducing the number of operators attending a facility during "off' shifts. The unattended operations philosophy has driven the Europeans to develop plant designs that integrate: reliable automation technologies with processes. What the Europeans (and a few United States utilities) have proven is that unattended operations, when properly designed and implemented, are in fact often more consistent and predictable than attended operations. Unattended operations are often significantly less risky than the attended approach because heavy dependence on staffs of operators with mixed and variable skill sets, knowledge, intuitions, and motivations is substantially reduced. The Europeans have proven that the unattended operations strategy saves money and is a reliable approach to facility operations. 4. Work Force Flexibility (WFF) Historically in the United States, the largest single dead time factor affecting the execution of utility maintenance work has been people waiting for other skills to arrive. Single-skill work systems artificially separate skills and crafts institutionalizing "skill-waiting" dead time. Europeans and progressive Ameriean utilities have shown that inereasing the range of skills possessed by maintenance personnel through cross training can reduce skill-waiting time by up to 40 percent. Cross training is standardized, expedited, and individually configured through structured programs supported by multimedia-based instruction systems. On-the-job practice, procedure, and standards review and guidance are provided by knowledge-based decision support systems. The work force flexibility strategy is illustrated in Figure 2-2. Staff members are no longer confined to one skill set or one functional area. As staff are cross trained in multiple areas, the circles overlap and a larger number of staff is available to work in all funetional areas, as needed. A "sweet spot," the crossover of all functional areas illustrated below, is the -P\540901D AUGUST AIREPORT\IS2-STRA TEI01 0998\MGW 2-3 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I goal of work force flexibility. This sweet spot represents staff who are trained in multiple skills, provide added value to the organization, and are compensated according to their skill sets. ~ Figure 2-2: Work Force Flexibility Provides Skill Crossover Figure 2-3 illustrates the goal of work force flexibility - increased productivity. Skill-based eompensation is part of this strategy because it allows employees to be paid based on their level and diversity of skills. The highest paid employees directly impact productivity measures in that they provide the most benefit by being skilled in multiple areas. 20% Loss in Productivity '- "~, ',- ", , ", " ", " '- ""'. '" ..."'........ .~. High o Low Medium Figure 2-3: Degree of Work Force Flexibility Implemented Figure 2:-4 further illustrates the benefits of work force flexibility. Since people have multiple skills, reducing waiting times yields: productivity increases, labor and dollar savings, and improved morale, because employees are learning and doing new things. Utilities and industries using this approach have seen an increase in wrench-on-bolt time from a typical 2.5 hours per day to 4.5 hours per day, or an 80 percent increase in productivity . -P:\5409010 AUGUSTAIREPORT\\S2-SlHA TEI010998IMGW 2-4 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Waiting for People Percent Time Waiting Waiting/Searching for Documentation Waiting for Parts Figure 2-4: How Work Force Flexibility Reduces Wait Times 5. Techno/c)gy As Strategy Many United States utilities are very cautious, viewing process control and information technology as "risks" to be minimized. The European paradigm recognizes the exponentially increasing value of applying technology as a strategy to every business process within the utility. When information technology is viewed as strategic, it can be factored into every challenge, initiative, or project required for utility operations, maintenance, management, and administration. On an enterprise-wide basis, integrated systems allow information to be appropriately shared, facilitating continuous improvements in business processes. The European paradigm leverages the cost-effectiveness of applied, integrated technology in many ways, for example: . Automated process operations. . Knowledge-based systems for infrastructure maintenance and water qualiity management. . Adv:mced customer service information systems. . Technology-based training, problem analysis, and decision support. 6. Organiza'tion As Strategy United States utilities traditionally have a hierarchical organizational structure that tends to be mechanistic, fixed, and resistant to change. Change, however, is inevitable to meet the growing demand to do more with less. -P:\5409010 AUGUSTAIREPORT\IS2-STHA lEI01 0998\MGW 2-5 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Our analysis did not review the potential cost savings for reengineering your organization. Along with technical and process analyses, we assessed various organizational scenarios and developed some estimates of savings based on implementing the organizational recommendations. These associated savings can be found in Section 4, Cost Savings and Calculations. Getting Started on the Right Path As you begin to operate your utility according to the six key strategies, there are two critical activities that must be undertaken to start becoming competitive and to secure your public ownership. First, talk to your political leaders and make sure they know what you are working on and what your goals and focus are. Second, show evidence of new work practices and results so that when your utility is examined, it will be obvious that you have implemented "best practices" and are operating just as fiscally conscious as would a private firm. -P\5409010 AUGUST AIREPORT\\S2-STRA TE\010998\MGW 2-6 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Section 3 - Observations This section summarizes our field results, presentation feedback and staff input/corrections. EMA has conducted over 120 assessments of this type for water and wastewater utilities throughout the US. In our assessment of Augusta-Richmond Utilities Department, we divided the Department into six functional sections: . Utility- Wide Observations . Water Treatment Observations - Treatment . - Maintenance Construction & Maintenance Observations Engineering Services Wastewater Treatment Observations - Treatment . . - Maintenance . - Sludge Hauling Customer Service Observations - Customer Contact - Billing - Meters Utility-Wide Observations The Augusta-Richmond Utilities Department is the result of the recent merging of the City of Augusta into the County of Richmond. The Utility is well managed and recognizes that the merger presents a unique opportunity to develop a modern, competitive organization. The Utility is financially sound with excellent prospects, and its employees are dedicated and committed to public service. -P\5409010 AUGUST AIREPORT\IS3-0BI010998\MGW 3 - 1 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I At present, the Utility remains organized along city/county lines. A "Class and Compensation" study has been conducted, and the organization is addressing inequities between former city and county compensation packages. However, compared to the industry overall, the salaries and benefits are relatively poor. There is relatively little use of technology throughout the Utility and most functions are labor intensive. The treatment facilities show a lack of recent investment. The Utility maintains a high level of overtime, and a "business" perspective is not wide spread. Cost impacts are not well appreciated and until recently, such information was not available to most employees. The budget is based on functions rather than activities making accurate costing difficult. The functional costs break down as: Administration- 18%, Construction & Maintenance - 18%, Customer Service - 12%, Wastewater Treatment - 30%, and Water Production - 22%. Water Treatment Observations These observations apply to the water filter plants, the ground water plants and the raw water pumping stations. All three sections are staffed 24 hours per day. Treatment Apart from alum, surface water filter plant chemicals are manually controlled. At the ground water plant, the chemicals are automatically started and stopped but require manual adjustment. Production in the surface water plant is hydraulically limited while the ground water plants cycle frequently. There is little on-line monitoring and control at the filter plant and operators make frequent and regularly scheduled rounds to check equipment and record data. The recording is manual as opposed to computer based. Operations at the raw water station and the canal operations are performed manually. Operations and maintenance are two distinct groups at the filter plant, but operators perform some maintenance tasks at the ground water plant and the raw water pumping station. The filter plant maintains two operators per shift for safety reasons and to perform some miscellaneous activities. -P\5409010 AUGUST AIREPORT\IS3-0BI010998\MGW 3-2 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Maintenance As mentioned, operations and maintenance are two distinct groups at the filter plant; there is no work force flexibility. However, operators perform some maintenance tasks at the ground water plant and the raw water pumping station. Maintenance at the filter plant is reactive rather than planned. There is an inventory valued at approximately $400,000.00 at the filter plant. Construction and Maintenance There is a new supervisory control and data acquisition (SCADA) system connecting approximately 40 formerly county sites. The SCADA system is monitored by operations staff providing 24-hour-per-day coverage from the control room. The maintenance staff is not divided along distribution and collection lines. Crew sizes are typically three or four staff. The crews meet daily at two locations to receive their work assignments. Little cross training occurs at present but there are plans to provide cross training for heavy equipment, vacuum truck, and rod truck operators. The crews perform mostly reactive maintenance, and there is a significant backlog of maintenance work. An inventory of approximately $500,000.00 is maintained. Engineering Services The Engineering section has recently been formed to provide engineering and inspection support to the Utility. Ten positions were planned and as of October 1997, seven have been filled. At the time of this assessment, there was no access to GIS or Auto Cad. GIS access is planned for 1998. An hydraulic model is maintained by ZEL Engineers but the Utility does not have direct access. Wastewater Treatment Observations The wastewater treatment plant comprises the older North plant, designed for 17 MGD, and the 28 MGD South plant. The plants are operated as one plant and staffed 24 hours per day, seven days per week in two, 12-hour -P\5409010 AUGUSTAIREPORT\\S3-0BI.010998\MGW 3-3 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I shifts. The flow split between the North and South plants is manually controlled. Treatment Some 40 cubic yards of grit are removed weekly from the influent screens. There are no performance measurements for removal rates, and the screens run continuously because they must be manually controlled. There are four 300 hp pumps in the influent station. The station is unsafe and will be completely renovated within the next few months. The clarifiers in the North Plant transfer RAS/W AS through draft tubes into a common transfer line. Differential head pressures can eause problems with this flow. Raw sludge pumping is on a timed rather than a calculated basis. WAS is routed to gravity belt thickeners. There are no transfers between primaries and secondaries, no pearth mixers, and no volatile solids reduction. There is automatic polymer chemical feed equipment on the thickening system. Process control procedures such as W AS/RAS rates, digester loadings, and centrifuge operation are based on past experience rather than current observations. Operators are required to manually adjust, start, and stop equipment. The dissolved oxygen meters are out of service necessitating manual readings in each basin effluent six times per day. These practices together with a minimal use of automated systems, a lack of "team" activities, and a scarcity of Best Practices process control measures lead to excessive staff levels. Maintenance Generally, there is very little planned maintenance. While daily work schedules may be planned and assigned priorities, the lack of an overall planned maintenance program dramatically reduces the effectiveness of the daily work. No predictive maintenance is practiced and the preventive maintenance is based on manufacturers' recommendations. The blower oil analysis has been contracted to an outside provider. Equipment maintenance is tracked using a manually produced card for each piece. The system is not complete, does not adequately track performance measures, and is resistant to information retrieval. Work orders are multi-part paper forms and carry no history to support the current repair. -P\5409010 AUGUST AIREPORT\IS3-0BI01 099B\MGW 3-4 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I The maintenance staff is budgeted for 10 people including a foreman but is currently operating with a total of seven. At the time of this study, the salaries appear low as does morale, generally, but the Class and Compensation Study may address this problem. The staff take advantage of the Utility's sick leave policy presenting further planning problems. The lift stations are visited and maintained by an employee visiting between 10 and 12 stations per day. An inventory of approximately $180,000.00 is maintained. Sludge Hauling The sludge thickening system does not operate as efficiently as it might. The sludge is thickened to 4.5% to 5% solids but could be improved to 7% and still be spread satisfactorily. The manager of the hauling crew has established some performance standards but the drivers employ poor work practices, including abuse of overtime, slow work, and unauthorized time off. At the time of this assessment, low pay might contribute to these poor work habits, but the Class and Compensation Study may address this issue. A significant amount of data is provided to EP A and state agencies. Customer Service Observations Customer Service has been reviewed in terms of its three major functions: customer contact, billing, and meters. This area of the Utility has had less success in merging because the different computer systems supporting the former city and county are not and cannot be integrated. As a result, consolidation of space, personnel, and proeedures is impossible. In general, not much technology has been invested in Customer Service, and its operations are labor intensive and conservative. This is particularly true for the telephone system, which is inadequate for the task. Training is lacking on many levels, although the staff would like to provide superior customer service. Overall, the staff spend a large proportion of time on a few problem accounts resulting in less energy and fewer programs designed to enhance the relationship between the Utility and the great majority of its customers. Customer Contact There are eight people whose primary job is to deal with customers for other reasons than taking payments. This amounts to 16% of the -P:\540901D AUGUST AIREPORT\IS3-0BID1099B\MGW 3-5 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Customc~r Service staff. The staff are evenly divided between the former city and county customers and locations. There is no call management system to assist in staffing levels and scheduling. Additionally, there is no call tracking system to build a database to provide information as to the types of calls by content, call histories by service address, or areas of town generating the most calls. Training seminars are being used where possible, but most training is done by senior employees. There is little training in customer contact techniques and no feedback mechanisms from customers exist. Training furnished by the Utility is concentrated on the current computer and billing systems, but staff receive no training in answering water quality questions. Billing There are 11 staff devoted to billing, either as cashiers, billing clerks, or delinquent accounts. That is 22% of the total Customer Service staff. They arc engaged in a mostly manual process with the computer assisting only in bill printing and account posting. There is substantial duplication of effort, much of it introduced to verify and double check. Much of the manual effort could be automated or contracted to an outside supplier. The work load is erratic because the meter reading cycles do not contain equal numbers of meters. This irregularity causes management and customer contact personnel to supplement the billing staff during busy periods. Training is provided for the billing staff in each of the computer systems in use. Customers must pay either by mail or in person. Billing agents, direct debit, standing orders, and credit card options are not available. Meters Meter readers and repair personnel represent 56% of Customer Service staff. Of these 28 positions, 16 are readers (including the meter reader supervisors) and 12 are in repairs and turn on/off activities. In the former city area, there are approximately 32,320 meters read by six employees for an average daily output of 250 meters. In the former county area, the meter count is 28,660 read by eight employees for an average daily output of 165 meters. In comparison, a good working average is 350 meters per day. -P\5409010 AUGUST AIREPORT\IS3-0BI01 0998\MGW 3-6 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I The installed meters average over 15 years of age. Experience indicates that meters of such an age are about 95% efficient. The merger of the city and county presents an excellent opportunity to redesign meter reading routes and the frequency of reads. -P\5409010 AUGUST AIREPORT\IS3-0BI010998\MGW 3-7 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Section 4 - Cost Savings and Calculations EMA's assessment of the Augusta-Richmond Utility Department's competitiveness gap is valued at 27.0% of the current operations and maintenance spending; 25.2% in the Customer Service Department and 27.4% [cJr the O&M Departments: Function Cost Basis Savings GAP eust. Svc.l Admin $2,344,564 $591,000 25.2% AlIO&M 9,346,599 2,561,500 27.4% Total $11,691,163.00 $3,152,500.00 27.0% Table 4-1: Augusta Richmond Utility Department's Gap To meet competitive utility standards, the Augusta-Richmond Utility Department must achieve a gap somewhere between 1 % and 10%, as illustrated in Figure 4-1. This can be accomplished within three to five years with appropriate adjustments and modifications to current business practices. Should the Utility be faced with a managed competition situation, there would be less than one year to react. A contract O&M provider could operate the Utility at close to a zero gap. The disadvantage of operating a utility at the zero gap is a drastic reduction in customer services. The 10% gap range provides a utility a comfort zone to supply similar customer services while appearing "unattractive" to a private firm. -P:\5409010 AUGUST AIREPORT\\S4-CALCULA T\01 0998\MGW 4 - 1 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I 30% A-RUD: 27% Gap I'L)w ca C) -10% CIl :a So.. o.ca CIlC) (,) (,) <( 5% A-RUD's Goal Between 1 & 10% _ 0% Time (3 - 5 Years) Private O&M Operator Runs 0% Gap Figure 4-1: Competitiveness Gap in Relation to Augusta-Richmond Utilities Department The savings calculations in this section might help the Utility move to a more competitive posture within the utility industry and to achieve a competitiveness gap somewhere between 1 and 10% within three to five years. This time frame allows practices, organizational, and culture changes to happen with a high level of employee involvement. Other solutions, such as those sought by managed competition, achieve changes in practices and organization through "slash and burn" techniques, but the culture of the utility remains unchanged. In this situation, old habits return easily and morale is low due to the lack of employee involvement and time to accept and implement new ideas. The savings opportunities in this section were presented to staff during EMA's assessment presentation in August 1997. Where improvements in the Utility's methods or practices could be made, the increase in efficiency is expressed in terms of staff savings. This does not necessarily mean that the work ean currently be completed with fewer staff members. Rather, it shows that the existing staff will be more efficient and "work smarter." The savings noted are expressed in gross terms. Some of the savings will have to be plowed back into technology and training for the full net benefits to accrue. The savings are expressed as gross savings to enable the Utility to appreciate the absolute value of the suggested recommendations and demonstrate that the changes can be financed from the Utility's cash flow. For example, it is the reduction in the number of operators which provides the capital for the required technology needed to supplant those operators and train others in the positions. -P:I5409010 AUGUSTAIREPORT\\S4-CALCULA l\01099B\MGW 4-2 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Non-O&M Cost Saving Opportunities Serial Work Processes Concurrent vs. Serial Work Processes. The way tasks are routed through an enterprise: concurrent or serial. More effective organizations optimize staff productivity with concurrent routing. II~ III III~II c=>1I 0% Never 50% 100% Always This score is 3.33. . Meter work is most often completed by the individual who began the task.. . Billing and other customer contact work often cannot be completed all at once. Additional information might be required, so the task is handed on for completion. Use of Cross Functional Teams Collaborative Teamwork. Use of cross functional teams; how employees do their work and communicate with other disciplines. More effective organizations optimize staff productivity with dependence on cross functionality. .~II' III ~II c=>1I 100% Always 75% 50% 25% 0% Never This score is 3.33 . The customer service and billing staffs are cross trained and assist each other. . Meter personnel are not cross trained. -P:\5409010 AUGUSTAIREPORT\\S4-CALCULA TI01099B\MGW 4-3 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Duplication of Effort (Over Checking and Inspecting) Duplication of Effort/Over-Checking. Are tasks or processes redundant? More effective organizations optimize staff productivity by avoiding redundant handling and inspecting. II~ III 4111 '1Ic=>1I Never Rarely Always This score is 2.85 . Very little duplication in the meter shop. . There is substantial duplication and cross checking in the billing function. These procedures have been consciously introduced to provide a safe environment for cash and for the employees, however, little advantage is taken of the automated alternatives. Use of Technology (Island, Re-entry, SILOS) Use of Technology. Is technology used productively and evaluated for work improvement? More effective organizations optimize staff productivity with a high dependence on productive implementation of technology. II~ III III ~II c=>1I Integrated Separate Islands This score is 3.5 . Billing cannot handle all customers because of different computer systems. . Technology infrastructure currently lacking throughout the Utility. . Fairly high degree of re-keying data and hand written work orders. . Meter information is up and down loaded to a PC with a minimum of re-entry. -P:\540901 0 AUGUSTAIREPORT\\S4-CALCULATI01 0998\MGW 4-4 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Strong Top-Down Culture Strong Top-Down Culture. Is leadership authoritarian and non- consensual, or does the leadership have and share a common vision? More effective organizations optimize staff productivity with a shared perception of a corporate vision and its day-to-day manifestation. II~ III 1111 I.~II Rarely This score is 4.5 . The current management maintains an open door policy at all levels, which was not the case prior to the consolidation. . Regardless of the relative openness, employees believe the culture remains strongly top-down. Specialty Silos Prevalent (Not My Job) Cross-Functionality vs. Prevalence of Specialty Silos. Are employees segmented in small focus areas? More effective organizations optimize staff productivity by avoiding such segmentation. Communications and team functioning are emphasized. .~II' III ~II c=>1I 0% Rarely 50% Generally 100% Everywhere This score is 3.44 . The customer contact and billing staff assist each other as standard practice. . There is substantial specialty in the meter shop. . Generally, computer skills are low - improvement will be needed in the future to implement cross functional work practices. -1>:15409010 AUGUSTAIREPORT\\S4-CALCULA T\010998\MGW 4-5 EMA Services. Inc. I I I I I I I I I I I I I I I I I I I Formal Cross Training Program (Work Force Flexibility) Formal Cross Training Program. Is there a cross training program mandated? More effective organizations provide avenues and opportunities for cross training. Formalized programs exist, with established norms for performance, and recognition (certification) of achievement. II~ III Complete 1111 Some .. c=>1I None This score is 3.83 . There is no cross training in the meter shop. Meter routes are not switched. . Customer contact and billing have successful cross training programs for staff. . A-RUD does not have a work force flexibility program. Inflexible Technical Standards Imposed (Not the Way We Do It) StajJlManagement Relationships. Is the organization collegial and cooperative in spirit, or is it rigid in its hierarchic organization, with emphasis on the trappings of position and power? II~ III Rarely III ~II c=>1I Always This score is 3.67 . Utility staff appears flexible overall but there is a culture of following the procedures already in place. -P:\5409010 AUGUSTAIREPORT\\S4-CALCULA TI01099B\MGW 4-6 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Old Outdated Policy and Procedures Impediments (Budgets, Time Keeping, etc.) Flexible Operating Environment vs. Policy and Procedure Impediments. Is the enterprise flexible and does it change for success? Are policies indicative of a competitive industry? More effective organizations embrace flexibility for standards and procedures. a~., Few 1111 '1Ic=>1I Many This score is 2.00 . The personnel interviewed thought there were few such impediments. . EMA noted that there was a need more written policy and procedures, e.g., Capital Project Schedule and Budget Management, and the current lack of such guidelines constituted a greater impediment than perceived. Culture Impediments (Fears, Punishments, Disrespect, Split Value Camps, No Customer Consciousness) Flexible Cultural Environment vs. Cultural Impediments. Are the employees and management open to new ideas? Do they embrace change? More effective organizations recognize the process of change and growth, assessing and embracing change as it is appropriate. a~II~II' Few Generally ,1Ic=>1I Many This score is 2.33 . There is a strong "can do" attitude fostered by the new management team. . The legacy of previous administrations is less open and the vestiges of that style remain strong. -P:\540901D AUGUSTAIREPORT\\S4-CAlCULATI01099B1MGW 4-7 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I . Very customer conscious but focused more on the problem accounts than on achieving overall customer satisfaction. Quality of Work Products (Generally External or Internal Customer Driven) Continuous Improvement Commitment. Are employees on the lookout to enhance goods and services? More effective organizations recognize the validity of this initiative and have methodologies to recognize and implement opportunities to improve. II<:==JII~.I 11Ic=>1I Low Value High Value Some Value This score is 2.33 . Generally, the quality of work is high although it takes longer to complete because of the technology issue. . A-RUD has no formal means of recognizing and encouraging continuous improvement. Management of Load (Do the Right Things Right) Service Level Agreements Management of Load. "Do the Right Things Right" - formalized service agreements. Can employees make decisions to do their job right the first time? Are they empowered? More effective organizations offer staff the freedom to identifY and perform key tasks to enhance organizational effectiveness and customer satisfaction. .~1I1 Always 1111 III~ Rarely Sometimes This score is 4.67 . There are no service level agreements. . There is a substantial amount of required higher level approval. . Excessive time appears to be spent with problem customers. -P:I5409010 AUGUSTAIREPORT\IS4-CALCULAT\01 099B1MGW 4-8 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Outsource Strategy Out-Source Strategy. Is the outsourcing of non-core processes considered? More effective organizations do what they do uniquely well, and identifY and off-load non-core processes. .~II' Open ,III ,II r=>. Some Closed Consideration This score is 5. 0 . The Utility has not looked at lock-box process. . Rarely look at or consider various outsourcing alternatives. Routine Customer Feedback Acquired Routine Customer Feedback Acquired and Action Taken. Do you ask for customer feedback and does the enterprise act positively on that feedback? More effective organizations actively solicit customer feedback and use it to tune delivery of goods and services. n~II' Daily ,II, 'II~ Never Yearly This score is 4.67 . The Utility does not conduct eustomer surveys. . There is no mechanism to receive and act upon customer feedback. -1>:\5409010 AUGUSTAIREPORT\\S4-CALCULA T\01099B1MGW 4-9 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Non-O&M Cost Saving Results 14 - 29 2 0 "Support" Work Practice Assessment Score 56 - 70 30. ___49__ 55 .,,/' 58% 0% 33 66 100DA. Lost Productivity Figure 4-2: A-RUD's Non-O&M Gap Calculation One way to assess the productivity gap is to estimate the staff level needed if the gap were closed. Current Staff: Total 8 11 28 47 Customer Contact Billing Meters Productivity Loss: 25% x 47 staff x $23,750/yr = $285K/year or 12 staff EMA has also calculated the non-O&M savings available to A-RUD by the adoption of certain recommendations, calculated and explained on the following pages. -P:\5409010 AUGUSTAIREPORT\IS4-CALCULAT\01099B1MGW 4-10 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Technology as Strategy to Reduce Costs Year Meters Cost of Meters Cost of Personnel Total Costs New Revenue Net Revenue Cumulative Meters @ $25 ea. 4 readers @ $95k1yr. 4% Improved Net Revenue Inflated at 5%/yr. Inflated at 5%/yr. A<xuracy/yr. 1 6000 $150,000.00 $95,000.00 $245,000.00 $114,000.00 -$131,000.00 -$131,000.00 2 12000 $157,500.00 $99,750.00 $257,250.00 $228,000.00 -$29,250.00 -$160,250.00 3 18000 $157,500.00 $104,737.50 $262,237.50 $342,000.00 $79,762.50 -$80,487.50 4 24000 $157,500.00 $109,974.38 $267,474.38 $456,000.00 $188,525.63 $108,038.13 5 30000 $157,500.00 $115,473.09 $272,973.09 $570,000.00 $297,026.91 $405,065.03 6 36000 $157,500.00 $121,246.75 $278,746.75 $684,000.00 $405,253.25 $810,318.28 7 42000 $157,500.00 $127,309.09 $284,809.09 $798,000.00 $513,190.91 $1,323,509.20 8 48000 $157,500.00 $133,674.54 $291,174.54 $912,000.00 $620,825.46 $1,944,334.66 9 54000 $157,500.00 $140,358.27 $297,858.27 $1,026,000.00 $728,141.73 $2,672,4 76.39 10 60000 $157,500.00 $147,376.18 $304,876.18 $1,140,000.00 $835,123.82 $3,507,600.21 11 66000 $157,500.00 $154,744.99 $312,244.99 $1,254,000.00 $941,755.01 $4,449,355.22 Total $1,725,000.00 $1,349,644.78 $3,074,644.78 $7,524,000.00 $4,449,355.22 Net Present Value $2,296,355.48 $4,127,267.34 $2,214,669.41 Costs incrs 5%/yr. Plime rate 8.5% Plime rate 8.5% Table 4-2: Reduced Costs Over 11 Years . Calculation Logic: The meter replacement program will improve revenues by approximately $7,524,000.00 over 11 years, while costing $3,074,644.78. That is a net difference of $4,449,355.22, or over $400,000 for each year. For the purposes of this analysis, we have used the conservative figure of $114,000 per year (the annual increase in revenues) as gross savings. . However, since the cash flows are not equal, there will be a net cash outflow for the first and second years, the program is better viewed using the Net Present Value concept, or the present value of a future revenue (cost) stream. The NPV of the income stream is $4,127,267.34, some $1,830,911.87 greater than the NPV of the costs. Over 11 years, that is a value of approximately $166,000.00 per year. . Adding the postal bar eode to the Utility's bills drops the postage from $.18 to $.159 per item. That anlounts to $7,500 per year, anticipating a reduction in mailings from 12 to 6. The savings can be achieved with only a small set up charge, not taken into consideration. Organization as Strategy Reorganizing the billing effort can yield substantial savings, $470,000.00 per year. There are two elements to the reorganization: reducing the frequency of billing from 12 to 6 times per year and outsourcing the payment processing. -P\5409010 AUGUST AIREPORT\IS4-CALCULA T\01 0998\MGW 4 - 11 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Action Cost Savings Reduce billing frequency & balance meter reading Cash flow $7,700.00 Postage $60,000.00 Printing 12,000.00 DP Supplies 15,000.00 Meter reading labor 1 165,000.00 Outsource Payment Processing New Telephone system $225,000.00 Processing set up 59,000.00 Cashier labor savings2 $213,000.00 Armored car 5,000.00 Total $291,700.00 $470,000.00 Table 4-3: Organization as Strategy Calculation Summary of Non O&M Gross Savings Technology As Strategy $121,500.00 Meter Replacement $114,000.00 Postal Bar Code $7,500.00 Organization As Strategy $470,000.00 Total $591,500.00 Table 4-4: Non O&M Gross Savings 1 Based on 14 positions at $19,000 each plus 25% overhead. 2 Based on 9 positions at $19,000 each plus 25% overhead. -P\5409010 AUGUST AIREPORT\IS4-CALCULA T\01 0998\MGW 4 - 12 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Lost Productivity for O&M - Water Treatment Plant Total Productive Operations 16 Number of Day Shift O&M FTEs x 60% Percentage Lost = 9 Lost Productivity Percentage Lost = No Maintenance - 60% PM - 50% Light Maintenance - 40% . Calculation Logic: On the day shift and weekends, A-RUD currently employees 14 operators and maintenance staff in three locations and two assistant superintendents for a total complement of 16 FTEs. Currently, the operators perform no maintenance duties. Although a straight calculation indicates as much as a 60% improvement in productivity is possible, we think only a 40% gain is practical. . Applying TPO principals, A-RUD would employ only 10 O&M Technicians for all locations distributed as follows: f our at SWTP, four at RWPS, and two at GWTPs. This is a savings of six FTEs calculated at $27,000 per year, fully loaded, or $162,000.00. Unattended in Off-Shifts 16 Total People In Off-Shifts At All Locations 8 Minimum Off- Shift Staff = 8 Lost Productivity . Calculation Logic: Currently, there are 16 off-shift operators at the three facilities with little or no automation and communication among them. With the automation of the facilities, staffing can be cut to one person per shift per location for a total of seven. This is a savings of eight FTEs at $27,000 per year which amounts to $216,000.00. -PI5409010 AUGUST AIREPORT\IS4-cALCULAT\01 D9981MGW 4 - 13 EMA Services, Inc. I I I Program Driven Maintenance 6 x 40% Percentage Lost = 2 I Total Number of Maintenance Staff Lost Productivity I I Planned: <20% = 40% Percentage 20-40% = 30% Lost: 40-60% = 20% 60-80% = 10% 80%> = 0% I I . Calculation Logic: The three water treatment facilities employee six personnel in maintenance positions. Improving the ratio of planned to reactive maintenance from its current level to 75% planned, will improve productivity by 40%. That amounts to two FTEs at $27,000 per year, or $54,000.00 I I Work Force Flexibility I 20 Number of Operators, Maintenance & Supervisors Left After The first 2 steps x 30% Percentage Lost for Inflexibility = 6 Lost Productivity I I I Totally Inflexible = 30% Very Flexible = 0% I I I I I -P\5409010 AUGUST AIREPORT\IS4-CALcULA T\01 0998\MGW 4 - 14 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Calculation Logic: A-RUD's workforce is quite inflexible. By cross training all treatment personnel, establishing bonus programs, salary incentives, and improved working conditions, productivity gains of up to 30% are possible. Savings are six FTEs at $27,000.00 per year, totaling $162,000.00 Technology as Strategy to Reduce Costs $ 470K X 20% - $ 94/000 Current $ Savings in Chemical $ $tOaOK X 20% - $ 2 t 6/000 Current $ Savings in Power $ . Calculation Logic: Applying automation to WTP operations typically enables utilities to reduce chemical costs, the amount depending on how chemical-intensive their operations are. Power costs also can be reduced. These dollar figures reflect "budgeted" amounts for the entire A-RUD operations and maintenance. Implementing chemical feed systems FF /FB control at all plants will save 20% of current expenditures. These chemical feed savings estimates are based on an empirical relationship between the amount spent on chemicals and the amount of closed-loop chemical feed control. The basis for this relationship lies in the realization that, without closed-loop control, operators tend to overfeed chemicals to be on the safe side of operations. In the case of A-RUD, only the alum system at the surface water plant was automated. Chlorine, fluoride and eorrosion eontrol ehemieals at that plant and all chemicals at the ground water treatment plant were not fully automated. As a result, operators must test for chemical residuals or other parameters to determine proper dosages. These tests are conducted periodically. Between tests, raw water quality and flow rate can change. To guard against producing water that does not meet standards or is a health threat when these changes occur, operators typically set the dosages higher than tests indicate. These overages are completely eliminated when closed-loop controls are installed. A secondary source of savings is that, when residuals or other parameters are measured online, the differences between individual operator testing procedures is eliminated. This also saves chemical costs by taking the various -P\540901D AUGUST AIREPORT\IS4-cALcULA T\010998IMGW 4 - 15 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I levels of conservative operations approaches of the individual operators out of the loop. . Implementing new energy technology, time of day scheduling and other features available form Georgia Power will yield a 20% cut in energy costs. Organization as Strategy 6:38 Current Span of Control = 3:38 Recommended Span of Control = 3 Lost Productivity Example: 40 Supervisors = 1 160 Total Staff 4 1 = 16 10 160 40 - 16 = 24 . Calculation Logic: EMA counted six supervisory positions in the water treatment plant. That represents a span of control of, roughly, six employees per supervisor. Expanding the span of control to 10 employees, still fairly modest by the goal of 15 or 16 set by some utilities, will yield a savings of three positions. This flattening of the organization should be accompanied by an evaluation of conducting non-core business, such as grounds keeping. The sum of the savings is one FTE at $27,000 per year plus approximately $50,000.00 derived from flattening the organization: estimated at $75,000.00. -P\5409010 AUGUST AIREPORT\IS4-cALcULA T\01 0998\MGW 4 - 16 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Summary of Water Treatment Gross O&M Savings Total Productive Operations $162,000.00 Unattended Operations 216,000.00 Program Driven Maintenance 54,000.00 Work Force Flexibility 162,000.00 Technology As Strategy 310,000.00 Chemical Savings $94,000.00 Electrical Savings 216,000.00 Organization As Strategy 75,000.00 TOTAL $979,000.00 Table 4-5: Water Treatment Gross O&M Savings Lost Productivity for O&M - Wastewater Treatment Program Driven Maintenance 15 x 40% Percentage Lost = 6 Lost Productivity Total Number of Maintenance Staff Planned: <20% = 40% Percentage 20-40% = 30% Lost: 40-60% = 20% 60-80% = 10% 80%> = 0% . Calculation Logic: The waste water treatment facility employs 15 personnel in maintenance positions. Improving the ratio of planned to reactive maintenance from its current level to 75% planned, will improve productivity by 40%. That amounts to six FTEs at $27,000 per year, or $162,000.00 -P:\540901D AUGUST AIREPORT\IS4-CALCULA T\010998\MGW 4 -17 , EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Work Force Flexibility 20 Number of Operators, Maintenance & Supervisors Left After The first step x 20% Percentage Lost for Inflexibility = 4 Lost Productivity Totally Inflexible = 20% Very Flexible = 0% Calculation Logic: A-RUD's workforce is quite inflexible. By cross training all treatment personnel, establishing bonus programs, salary incentives, and improved working conditions, productivity gains of up to 20% are possible. This amounts to four FTEs at $27,000.00 per year, or $108,000.00. Technology as Strategy Calculation Logic: EMA has included an energy analysis in this assessment. The report can be found in the Appendix. Placing Time of Use Riders on major meters rate schedules and scheduling an Energy Audit by Georgia Power will result in a 15% savings from the current annual cost. The following graphs depict current energy usage at the Wastewater facility during 1996 and projected for 1997. The subsequent years illustrate the implementation of an aggressive Energy Audit and Conservation Plan which could yield an annual savings of 15% over the next three years. The amount of these savings exceeds $300,000. Neither the consolidation of treatment into one process train nor the decommissioning of the centrifuge were used for these projections. -PI5409010 AUGUST AIREPORT\IS4-CALCULA T\01 0998\MGW 4 - 18 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Wastewater Energy Savings Opportunities 900 823---833------------ ----- ---..-.- 140 _$$IYEAR 708 -..-SAVINGS 120 800 Ul 100 g' '> .. 80 III ii ;:, 60 c ~ 40 ::: Ul b 20 g iii 700 <3 600 ii E 500 ~ : 400 Ul g 300 o ~ 200 100 o o -20 Current 1997 1998 1999 2000 Figure 4-3: Wastewater Energy Savings Opportunities The annual energy savings and the estimated reduction of chemical costs of $250,000 are based on the assumption that the digesters have been rehabilitated, the centrifuges shut down and the thickening process optimized to drastically reduce the consumption ofpolyrner. Organization as Strategy The Utility should evaluate the contracting out of non-core business activities. Specifically, EMA is referring to a grounds keeping position and four sludge hauling positions. If the sludge hauling were contracted out, the Utility would also save the operating costs of four trucks. . Calculation Logic: The grounds keeping position would save $24,500.00, the four sludge hauling positions would save $98,000.00, and the savings from truck operations are based on $.50 per mile over 50,000 miles per year, or$100,000.00. The total savings available from using organization as strategy amount to $222,500.00 per year. (I'he Utility has indicated that all 11 positions in the sludge handling area could be outsourced. EMA agrees that is likely but in the case of this analysis is absolutely certain only of the recommendations noted above.) -P:I5409010 AUGUSTAIREPORnIS4-CALCULATI01099B\MGW 4 -19 EMA Services. Inc. J I I I I I I I I I I I I I I I I I I Summary of Wastewater Treatment Gross O&M Savings Program Driven Maintenance $162,000.00 Work Force Flexibility 108,000.00 Technology As Strategy 250,000.00 Organization As Strategy 222,500.00 TOTAL $742,500.00 Table 4-6: Wastewater Treatment Gross O&M Savings Lost Productivity for O&M - Construction & Maintenance Total Productive Operations . Calculation Logic: Currently, the Utility monitors and controls more than 40 facilities on its existing SCADA system. The Utility employees five control room operators to perform this function, one assigned to the day shift. . By adding the remaining sites to the SCADA system, optimizing the automatic control functions at all sites, and connecting the existing SCADA to the plant control systems, the SCADA system can be run from the plants eliminating the need for the day shift operator. The savings is one FTE at $27,000 per year. Unattended in Off-Shifts 4 Total People In Off-Shifts At All Locations o Minimum Off- Shift Staff = 4 Lost Productivity . Calculation Logic: By adding the remammg sites to the SCADA system, optimizing the automatic control functions at all sites, and connecting the existing SCADA to the plant control systems, the SCADA system can be run from the plants. The savings is four FTEs at $27,000 per year, or $108,000.00. -P:\5409010 AUGUST AIREPOR1\IS4-CALcULA 1\010998\MGW 4 - 20 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Program Driven Maintenance 48 x 20% Percentage Lost = 9 Lost Productivity Total Number of Maintenance Staff Planned: <20% = 40% Percentage 20-40% = 30% Lost: 40-60% = 20% 60-80% = 10% 80%> = 0% . Calculation Logic: There are 48 FTEs engaged in maintenance activities in A-RUD's Construction & Maintenance group. The maintenance work is mostly reactive and an improvement in the proportion of planned maintenance will yield a 20% productivity gain. The gain is translated into a savings of nine FTEs at $27,000 per year, for a total of $243,000.00. Work Force Flexibility 42 Number of Operators, Maintenance & Supervisors Left After The first 2 steps x 15% Percentage Lost for Inflexibility = 6 Lost Productivity Totally Inflexible = 30% Very Flexible = 0% Calculation Logic: A-RUD's workforce is quite inflexible. By cross training all C&M personnel, establishing bonus programs, salary incentives, and improved working conditions, productivity gains of up to 15% are possible. Productivity gains are smaller than for the treatment plants. Contracting out for some of the C&M functions could increase the gains. Savings are six FTEs at $27,000.00 per year, totaling $162,000.00. -P\5409010 AUGUST AIREPOR1\\S4-CALcULA 1\010998\MGW 4 - 21 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Organization as Strategy 13:39 = 3:39 = 10 Lost Productivity Current Span of Control Recommended Span of Control Example: 40 Supervisors = 1 160 Total Staff 4 1 = 16 10 160 40 - 16 = 24 . Calculation Logic: EMA counted 13 supervisory positIons in Construction and Maintenance. That represents a span of control of, roughly, three employees per supervisor. Expanding the span of control to 10 employees, still fairly modest by the goal of 15 or 16 set by some utilities, will yield a savings of 10 positions. This flattening of the organization should be accompanied by a reorganization and the formation of three additional crews. The sum of the savings is 10 FTEs at $27,000 per year plus approximately $30,000.00 derived from flattening the organization: $300,000.00. Summary of Construction and Maintenance Gross O&M Savings Total Productive Operations $27,000.00 Unattended (Off-shift) 108,000.00 Program Driven Maintenance 243,000.00 Work Force Flexibility 162,000.00 Organization As Strategy 300,000.00 TOTAL $840,000.00 Table 4-7: Construction and Maintenance Gross O&M Savings -PI5409010 AUGUST AIREPOR1\IS4-CALcULA TI01 0998\MGW 4 - 22 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I The Competitive GAP: Summary of Gross Savings Paradigm NOD O&M WTP WWTP C&M Total Total Productive Operations 162,000 27,000 189,000 Unattended Operation 216,000 108,000 324,000 Planned YS. Reactive 54,000 162,000 243,000 459,000 Work Force Flexibility 162,000 108,000 162,000 432,000 Technology as Strategy 121,000 310,000 250,000 681,000 Organization as Strategy 470,000 75,000 222,500 300,000 1,067,500 TOTAL $591,000 $979,000 $742,500 $840,000 $3,152,500 Table 4-8: Competitive Gap Summary -P\5409010 AUGUST AIREPOR1\IS4-cALcULA 1\01 0998\MGW 4 - 23 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Section 5 - Recommendations Recommendations Have Three Focus Areas . Business Practices . Use of Technology . Skill and Compensation Levels Thesis Business Practices Skills & Compensation Technology Master Plan Water Wastewater Customer Service Construct. & Eng. Addressing the Business Practice Issues Will Foster a Culture of Competitiveness Awareness The business practice issues for immediate attention include: defining a future vision, establishing performance based metrics, involving managers in budget preparation, developing a program-driven maintenance system, and redesigning Customer Service functions. -P:\5409010 AUGUSTAIREPORnIS5-RECOMI01099B\MGW 5 -1 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I There could hardly be a better time for A-RUD to embark upon an exercise to establish a Vision and Mission statement for the newly eombined Department. The staff sense that there is a wonderful opportunity for the Utility in the merger and are willing and excited about the prospects. Unifying the Department under a new philosophy will encourage the adoption of a business-wide view among the employees and help the Utility forge an agreement with its customers. The new sense of purpose will assist in the development of performance measures agreed upon by all. Such measures tend to improve performance in the direction favored by the Utility, rather than in some arbitrary manner. Developing performance measures with and for customers also improves the Utility's competitiveness. Developing a heightened sense of the organization is enhanced when all levels of management participate in budget preparation and are accountable for budget performance. Employees in charge of various functions will have a much higher level of commitment when they are involved in the budgeting process. A programmatic approach to maintenance dramatically alters how the Utility's assets are cared for and operated. Program driven maintenance consists of repetitive maintenance activities triggered by some measured frequency, condition, or upon demand. The approach avoids reactive, breakdown maintenance in favor of one based on cost effectiveness and critical need. Implementation of Technological Solutions Will Improve the Bottom Line There are well founded and reliable technological solutions available to the Utility. These solutions are particularly useful for the treatment plants, all maintenance activities, and in the Customer Service area: . The introduction of a process control system at the treatment plants will reduce both operations and maintenance costs. The current level of process control equipment is lower than average for the size of the Utility and the need is well recognized. . The introduction of a Computerized Maintenance Management System (CMMS) will improve resource allocation, reduce parts inventory, improve decision making, and improve equipment performance. Coupled with altered maintenance practices, as noted above, the potential savings are noteworthy. -P:\5409010 AUGUST AIREPOR1\IS5-RECOMID10998\MGW 5-2 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I . The current situation, separate and unconnected billing and customer systems, requires the Utility to staff more locations with more people than would be the case using a single system. The benefit to the Utility will be even greater if a new system were chosen after the current work practices had been reviewed and improved. The Skills (and Consequently) Compensation Levels Will Require Upgrading to Support the New Practices The new technology and business practices recommended in this report require a different set of skills than the Utility has available. Training programs and compensation levels must be improved to reflect the new responsibilities and accountabilities. Retaining the best of the Utility's staff and attracting useful additions, rather than municipal parity, becomes the new focus: . The Utility must complete an inventory of the skills currently available among its employees. An assessment of the amount of work demanding these skills together with the demand for new skills will assist in discovering the training required and the existing skills gap. . Salaries should be "broad-banded" as a means of lessening the impact of bureaucracy and mitigating conflict with the municipality. "Broad- banding" and cross training will help to integrate the former County and City staffs into the new Department. . A general improvement in skills leads to jobs of greater value and more satisfied employees. Job satisfaction cannot replace the economic requirement for work, but it can greatly improve the expenence. Recommendations 1. Strategic Business Plan The process begins by creating the road map to facilitate moving from the current to the desired position, the Business Plan. As with the road map, the Business Plan serves as a guide. A-RUD will have a clear idea of its current position relative to its desired one and an appreciation for the many possible routes between the two. The purpose of the plan is to pick the most likely route while remaining open to changes, so long as the target is kept in mind. -P:\54D901D AUGUST AIREPOR1\IS5-REcOMI010998\MGW 5-3 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I . Defining the Vision and Mission is similar to defining the destination. It is what is kept in front of the Utility and its employees as the plan is implemented over time. . Once the destination is decided, the Utility will have to develop projects designed to move the Utility in the desired direction. As there are many ways to achieve such a result, each project should have a cost to benefit analysis to enable comparison. . A by-pro duet of developing the necessary project will be the identification of quick wins. That is, those changes discovered during the process which will yield immediate alteration of practices without training or large capital expenditures. . The next step in the Business Plan process is to establish priorities among the projects identified. The cost to benefit analysis for each project is useful in this work but not definitive. . Finally, the steps necessary to implement each project in turn are identified. Reengineering is a Six Step Process Step 6 Figure 5-1: Steps to Reengineering -P:\5409010 AUGUSTAIREPOR1\\S5-RECOMI010998\MGW 5-4 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Recommendations for Implementing the Strategic Business Plan . Establish Vision and Mission Statements for the future and a staged, multi-year plan for achieving both. . Develop an Information and Automation Systems Master Plan based on competitive business strategies. Such a plan should include: organizational, training, and technological aspects, as well as the plan's approach, schedule, costs, and benefits. . Apply "Best Practices" to the Utility's O&M functions. Move toward an integrated operations and maintenance group, featuring work force flexibility and program driven maintenance. This also includes sufficient plant automation to enable unattended operation. . Develop a new compensation matrix and training program to support the "Best Practices" and properly compensate the Utility's employees. 2. Water and Wastewater Treatment Water Water Automate GWTPs Monitor from SWTPs Install Instrumentation @ SWTPs Local Control Panels Install Monitoring Level PCS Install SWTP Automation System Train Instrument Techs Implement TPO Concepts Develop Teams WFF/SBC Implementation Plan for Water Projects EMA recommends improving the process control and SCADA systems, cross training, and increasing the supervisory span of control to operate the water treatment plant with as few as 15 persons. In order to achieve this goal, all of the elements noted above will have to be planned and executed. Wastewater The EMA recommendations for plant automation, staff cross training, and increasing the supervisory span of control at the wastewater facility can occur along with the same activity at the water treatment facilities. Some -P\5409010 AUGUST AIREPOR1\IS5-REcOMI01 0998\MGW 5-5 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I of the specific recommendations, i.e., shutting down the North Plant, reducing the use of polymer, would be more thoroughly investigated during this process. 3. Construction and Maintenance Construction & Maintenance ReengineerlPilot Design CMMS Integration Upgrade SCADA Reengineer C&M (training) Implementation Plan for Construction & Maintenance Projects Upgrading the SCADA system and connecting it to the plant control system removes all monitoring responsibilities from this group. Implementing a CMMS and increasing the supervisory span of control also frees resources which might be used to increase the amount of extensions accomplished by the Utility. 4. Customer Service Customer Service/Meters Project Initiation - Develop CIS Vision - CS Process Analysis Initial CIS Requirements/RFI Vendor Demos - Revise Requirements/Evai. Criteria - Support Requirements Vendor Selection - Implementation Plan . - 1m plementation/Conversion Implementation Plan for Customer Service Projects The steps noted above are the ideal method by which to redefine A-RUD's business practices and purchase and install a new customer information system. Along the way, the recommended alterations in payment processing and meter reading could be accommodated. EMA understands that the Utility is not the full master of its fate in this instance. The new municipal government has declared a new CIS a priority and A-RUD may not be given the time for full reflection. In any event, the six step planning process model noted above should be employed to facilitate the recommended changes in business practices. -P\540901D AUGUST AIREPOR1\IS5-RECOMI01 0998\MGW 5-6 EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Agpendix A Assessment Presentation -P:\5409010 AUGUSTMPXA\122297\AlO EMA Services, Inc. I I I I I I I I I I I I I I I I I I I Augusta-Richmond Utilities Department Competitiveness Assessment Results Presentation and Workshop II ::~~__ August 12, 1997 Introduction e Purpose of assessment e EMA's Qualifications e Explanation of terms e How was data gathered for Augusta? ........Alc::hmCMtd'--- No.1: From Os:M to Total Productive Operations . No people waiting and watching for failure . All doing planned maintenance work . Specialist imported only when needed . Knowledge workers only need apply Agenda e Introduction e Observations e Savings Opportunities e Recommendations e A Glimpse into the Future e Discussion ~lMIIeo Assessment Compares Augusta Against Six Strategies Attended FaclUtles . Unattended Facilities Wor1l Separated by C,aftlSk,'i (SILOS) . Work Fon:e Flexibility & Cross-functional Teamwor1< Technology Organization as Structure . Teehnology.. Strategy . Organization as Strategy No.2: From Reactive to Planned Maintenance 11 'vq, ~ ~0_ ~.~ ~/ ~ "",- // 01,.."'" /' / -'f)ce ~"~.;~ .- " <":}<,:~"'.)-.,, Plu(,(rd \'-.'><^>~- ,..-' ,,- 1 I I I I I I I I I I I I I I I I I I I No.3: From Attended Facilities to Unattendedness Decision to Attend a Facility I- Two People on Shift for Safety I- ThI'H Nonnal ShlftaJDay Plus One for VacatlonIHolklaylSlck l- I- Eight People Per Attended Fecllity Coat $300K to $5OOK No.5: Technology as Strategy Technology .s Strategy Reinforces New Practices No.6: From Organization as Control to Org. as Strategy Span of Control ~.' 04..-.\.'\, , I No.4: From Work Separated by Craft to Work Force Flexibility Bulk of employees in "Sweet spor' No.6: Organization as Strategy Organization Silos Observations . Utility-wide . Water: Treatment, Maintenance . Construction & Maintenance . Engineering Services . Wastewater: Treatment, Maintenance, Sludge Hauling . Customer Service: Cust. Contact Billing, Meters ' ~mondu.. 2 I I I Observations: Utility-wide I . Recent, unique business mission: merged utilities . Well managed during and after merger . Functional areas still divided along City/County lines . Poor salarylbenefit package, differences divide organization . Little use of technology exists throughout the organization I I ~UlIIlI.. I I Observations: Utility-wide I . A "Class & Compensation" study has been conducted . Former City utility staff make less than former County utility staff . Effects of study on organization unclear . Average compensation levels seem low . "Business" perspective not wide-spread. Cost impacts not recognized I I I ~UlIIlIoo I I Observations: Water Treatment I . Includes surface water filter plants, ground water plants, and raw water pumping station . All three sections provide 24-hour per day coverage . Most operational tasks performed manually . Except for alum, surface water filter plant chemicals are controlled manually . Ground water plant chemicals start/stop automatically but require manual adjustment qlllloAldlmooldUllllloo I I I I Observations: Utility-wide . Most functions are labor-intensive . Treatment facilities show lack of recent capital investment . Employees are dedicated and committed to public service . Some nervous people (morale low in some areas) . Financial condition is sound and no major change is anticipated . A high level of overtime is expended ~lMIieo Observations: Utility-wide . Function-based budget instead of activity- based makes costs difficult to analyze . GIS being developed . Utility has healthy financial future . Costs are divided as: Admin. 18%, CS 11 %, Wastewater Treatment 30%, Constr. & Mainl 18%, Water Production 22% . VINIITP staff produce monthly spreadsheets - data source and formulas unidentified ~lMIieo Observations: Water Treatment . Ground water plants cycle frequently . Raw water pump station and canal operations are performed manually . O&M - Two distinct groups at filter plant (no WFF), operations staff do some maintenance tasks at ground water plants and raw water pump station . Surface production is hydraulically limited Auguoto-RIchmond lMIieo 3 I I I Observations: Water Treatment I . Filter plant staffs two operators/shift for safety and to perform some manual operations tasks that require two staff . On-line monitoring and control is virtually non- existent at the filter plant . Operators make frequent, regularly scheduled rounds to check equipment and record data manually I I ~UIIw. I I Observations: Construction & Maintenance (Indudes Distribution" CoIledIon) . Same staff perform collection and distribution system maintenance . Maintenance is mostly reactive . Crew sizes are typically 3 - 4 staff . Maintenance staff work days, operations staff provide 24hr/day coverage at control room . New SCADA system connects approximately 40 formerty-county sites I I I I ~d~ I I Observations: Engineering Services I . Provide engineering and inspection support to utility . This is a newly-formed section, not yet fully staffed . No access to GIS, no AutoCAD or hydraulic model I I AlIglI. R1c1,,,olld ~ I I Observations: Water Plant Maintenance . O&M - Two distinct groups at filter plant (no WFF), operations staff do some maintenance tasks at ground water plants and raw water pump station . Maintenance is reactive at the filter plant . Inventory approx. $400,000 ~lMIeo Observations: Construction & Maintenance . Little cross-training occurs now but is planned for heavy equipment, vacuum truck, and rod truck operators in the future . Crews meet daily at two locations to receive work assignments . There is a significant backlog of maintenance work . Inventory maintained approx. $500,000 ~lMIeo Observations: Wastewater Treatment . North plant is older and designed for 17 mgd . South plant designed for 28 mgd . Grit/screenings = 40 yards per week, no metries for grit removal rates . Staffed 24 hrs per day, 7 days per week by 2 operators and shift supervisor for 12-hr shifts . Raw water lift station has 4 300hp pumps . Influent station unsafe, will get complete renovation this year ~UtIIIeo 4 I I I Observations: Wastewater Treatment I . North plant darifiers transfer RASNoJAS through draft tubes into common transfer line. Differential head pressures cause problems with flow from North . Raw sludge pumping is on timed basis, not calculated . WAS routed to gravity belt thickeners to digesters, no transfer between primaries and secondaries (foaming), no pearth mixers, no volatile solids reduction I I ~mondu... I I Observations: Wastewater Treatment I . Operators must visually inspect every 2 hours . No signs of "team. activities . Fluctuating influent quality . Minimal use of automated systems (SCADA installation in lift stations scheduled) . lack of Best Practices process control measures . WNTP staff produce monthly spreadsheets - data source and fonnulas unidentified AlIgl_ Rk:hmoIKI UMeI I I I I I Observations: Wastewater Maintenance I . Very little planned PM . Evidence points to a lack of planning or prioritization . Manual PM system is incomplete and does not adequately track perfonnance measurements . Predictive maintenance is not practiced . Maintenance staff morale is low I I ....-.- \MlIoo I I Observations: Wastewater Treatment . lack of housekeeping and maintenance . Excessive O&M staff . Operators required to manually adjusVstartlstop equipment . Automatic polymer chemical feed equipment is located on solids dewatering . Main control panels in process units do not function by remote operation ~mondlMtl_ Observations: Wastewater Treatment . Flow split between plants is manual . local dissolved oxygen meters o/s . DO reading taken manually in each basin effluent 6 times per day . Operators must manually operate traveling bar screens - so they are left on continuously . Process control (WAS/RAS rates, digester loadings, centrifuge operation) is based on "what has worked in the pasr ",,-,-\MlIoo Observations: Wastewater Maintenance . Equipment maintenance tracked with old card system, separate PM (preventive maint.) cards are kept for each piece of equipment . No predictive maintenance. PM is based on manufacturer recommendations. Blower oil analysis outsourced . Staff = 9 + 1 foreman. Salaries seem low . lift stations maintained by 1 employee (10-12 per day) ....101- Rk:hmoIKlUIiIIeIl 5 I I I Observations: Wastewater Maintenance I . Staff takes advantage of sick time policy, causes foreman planning problems . Most work is reactive, no data to support . Work orders are multi-part paper fonns, no fonnal perfonnance measurements are kept . Maintains inventory approx. $180,000 I I A&IguoIa-RIcIvn UUeo I I Observations: Customer Service . Despite merger, different billing systems do not allow consolidated CS functions . Not much technology is invested in CS . Desire to perfonn excellent CS, but lack of respect for customers exists . Training on many levels is lacking . Telephone communication among the 3 CS locations should be easier . CS operations are labor intensive and conservative I I I I A&IguoIa-RIcIvn UMeo I I Observations: Cust. Service - Billing I . Billing is mainly manual process with computer assistance in bill printing and account posting . 22% of CS personnel are devoted to billing, induding processing incoming payments. Customer contact personnel and mgrs supplement this total during busy periods . Work load erratic due to meter reading cydes with varying numbers of meters I I A&IguoIa-RIcIvn UMeo I I Observations: Sludge Hauling . Poor perfonnance of dewatering system . Poor job practices of truck drivers - abuse of overtime, slow work, unauthorized time off . Low pay may affect poor job habits . Metrics have been established by mgr. of hauling crew . Sludge is 4.5 - 5% solids, 7% could be spread satisfactorily . Significant amount of data is reported to the EPA and state agencies ~lMIoo Observations: Cust. Service - Cust. Contact . Customer contact personnel amount to only 16% of the employees in CS . No call management system to assist in staffing levels and scheduling . No training in customer contact techniques and no feed back mechanisms from customers to assist staff . Some internal training in handling billing inquiries but not for water quality questions ___lMIoo Observations: Cust. Service - Billing . Substantial duplication of effort and much manual work could be automated or outsourced . Customers do not have alternative payment locations or methods ~_ I'IdwnoIwt..... 6 I I I I I Observations: Meters . Meter readers and repairers are 56% of CS personnel. Of 28 in meters,16 are readers, the rest are in repairs and turn on/off activities . Average work load for meter reader is approx. 175 per day, given even cycles. In contrast, a good working average is 350 per day . Meters average 15+ years. Experience indicates such meters are about 95% efficient . Merger is opportunity to redesign meter reading routes and frequency of reads ~UMos I I I I I · Meters 48 . Customer Service 44 Non O&M Group Competitiveness Model I I I I Savings Opportunities I I I I I ~ RIdmotNlu.. Non O&M Group Competitiveness Model . Meters 52 · Customer Service 49 Non O&M Group Competitiveness Model . Meters 48 · Customer Service 45 Opportunities: Water Treatment #1 O&M to TPO . Current - 7 operators among 3 locations, 2 assl superintendents, 7 mainl staff (incl. janitorial and lab tech) = 16 total FTEs . Future -10 O&M techs. for all locations, all staff doing O&M, only supts. for each facility, O&M techs. are paged if alarm occurs, staff distribution = 4 at SWTP, 4 at RWPS, 2 at GWTPs, facilities automated Savings = 6 FTEs x $27K = $162K per year ~UIneo 7 I I I Opportunities: Water Treatment I #2 Reactive to Planned Maintenance . O&M staff on days = 10 from strategy #1, savings = 20% opportunity if PM/CM ratio improved to 75%/25%, 20% = 2 FTEs I I Savings = 2 FTEs x $27K = $54K per year ~UMeo I I Opportunities: Water Treatment I #4 Work Force Flexibility . Improve culture and morale . Establish gain sharing with bonus fund = saved sick leave $ . Apply salary increase for certifications, shift differential, etc. . Bonus for perfonnance . Cross-train to eliminate O&M silos I I I AJ9IIta RldwnCNld u... I I Opportunities: Water Treatment I #5 Technology as Strategy . Investigate/implement chemical feed systems FFIFB control at all plants, savings of 20% = $94K per year . Investigate/implement new/emerging technology elee. equip., time-of-clay scheduling, energy audit Savings of 20% = $216K per year Savings = $310K per year I I ~ AlotlmooldUMeo I I Opportunities: Water Treatment #3 Attended to Unattended (off-shift ops) . Current - 16 off-shift operators at 3 locations, little or no automationlcomm. among facilities . Future - 7 off-shift operators (1 per shift at SWTP and GWTPs and RWPS), all facilities automated Savings = 9 FTEs x $27K = $243K per year "Ill'ooto_ld~ Opportunities: Water Treatment #4 Work Force Flexibility continued . Cross-train between SWTP, GWTPs, and raw water pumping stations Savings · 6 FTEs x S27K per year. +/- S162K per year through productivity Increases gained from cross-tralned work force ....Igl.. RldHnoIMi...... Opportunities: Water Treatment #6 Organization as Strategy . Evaluate contracting out of non-core business areas . Groundskeeping saves 1 staff = $27K . Flatten organization as WFF is implemented, savings of $50-75K per year Savings = $75-100K per year ~~ 8 I I I Opportunities: Construction & Maintenance I #1 O&M to TPO (day shift ops) . Current - 1 control room operator, monitors and controls 40+ facilities on existing SCADA . Future - Add remaining sites to SCADA, optimize automatic control at all sites, connect SCADA system to plant control systems and run SCADA from plants, no operator required Savings = 1 FTE x $27K per year ~mond~ I I I I Opportunities: Construction & Maintenance I #3 Attended to Unattended (off-shift ops) . Current - 4 control room operators (monitor and control 40+ sites on existing SCADA) . Future - Connect SCADA to plant control systems and run SCADA from plants, no operators required I I Savings" 4 FTEs x $27K .. $108K per year &.1QU8tI RktamoIKI..... I I I Opportunities: Construction & Maintenance #5 Technology as Strategy . Investigate/implement a CMMS to support reengineered flexible work force, savings result from best practices (WFF & PM) made possible with CMMS . Integrate CMMS with automation systems to optimize maintenance planning, savings result from optimum stocking and unit equip. maint. frequency Total savings $ are not measureable now ~~ I I I I I Opportunities: Construction & Maintenance #2 Reactive to Planned Maintenance . Current - 38 c&M staff (3-4) per crew, 2 vacuum truck, 3 rod truck, 3 heavy equip, 2 well = 48 FTEs total . Maintenance is primarily reactive . Future - PM/CM ratio at 75%/25% = 20% opportunity, 20% = 9 FTEs Savings = 9 FTEs x $27K per year = $243K per year ~lMtIoa Opportunities: Construction & Maintenance #4 Work Force Flexibility . Improve culture and morale . Establish gain sharing with bonus fund = saved sick leave $ . Apply salary increase for certifications, shift differential, ete. . Bonus for performance . As planned, cross-train equipment operators Savings. 6 FTEs x $27K per year. +/- $162K per year through productivity Increases gained from cross-tralned work force i\ugl.. _lei lMtIoa Opportunities: Construction & Maintenance #6 Organization as Strategy . Current - 49 staff (+10 non C&M positions), of these 49,10 working supervisors, 3 non working . Future - move to 16:1 span of control, reorganize, reduce supervisors/planners = make 3 more crews Savings due to productivity improvement = 10 x $30K = $300K per year i\ugl.. _lei lMtIoa 9 I I I Opportunities: Engineering Services I The 4 O&M strategies don't work well in an engineering setting. Rather, it's best to apply the non-O&M tests I 1. SerI.. w<<k practices: 3 2. Cross-funcllon" teams: 3 3. Duplication of eI'fort: 3 4. U.. of lKhnoIogy: 1 or 5 5. TOfHIown culture: 3 I. SpecIalty IUOS prev"l: 5 7. CrosHnIInlng: 5 e. Intlexlbl.~: 3 II. Old pollclls & proc:Id.: 4 10. Cultunlllmpllwlmlnta: 4 11. QuIIIty of procIuclI: 3 12. IIIgmt of IOId, 1<<YIce: 3 13. Outsourc:. atratIgy: 3 14. CuatomIr fIeclbIlc:k: 4 I 51 points total "'1Ql1Ita Richmond lMIeI I I Opportunities: Engineering Services I #5 Technology as Strategy . Evaluatelimplement access to existing systems including GIS, AutoCAD, and hydraulic modeling . Savings result from optimized planning and design I I Total savings $ are not measurable now I ""... Fln_Mt..... I I Opportunities: Wastewater Treatment I #2 Reactive to Planned Maintenance . Implement planned maintenance culture, institute preventative maint. program . Improves productivity by 30% . Savings = .3 x (15 staff x $30K per year) = $135K per year (= to 5 fewer staff) I I ~- I I Opportunities: Engineering Services . 51 points total = average efficient utility with some room for improvement . Can't measure opportunity now Total savings $ are not measureable now ~- Opportunities: Engineering Services #6 Organization as Strategy . Review the business functions of the utility to ensure proper focus, implement staffing plan accordingly Total savings are not measureable now ~- Opportunities: Wastewater Treatment #2 Reactive to Planned Maintenance continued . Low WFF = 20% improvement possible . Low skills = higher costs for improved skills Optimized staff for strategy #2 = 10 .2 x 10 x 30K per year = $60K per year ....1Ql_ RtetlllnOltd..... /0 I I I Opportunities: Wastewater Treatment I I #5 Technology as Strategy . Investigate digester rehabilitation, centrifuge shutdown and process optimization for sludge dewatering . Energy cost savings of - $70K per year (included in energy analysis) . Chemical cost savings of - $250K per year I I ~mond~ I Opportunities: Wastewater Treatment I I I I I I I I Opportunities: Customer Service/Meters #5 Technology as Strategy . Add postal bar coding to bills, small setup cost, go from $.18 to $.159 per postcard = savings of $7.5K per year . Meter replacement schedule to reduce avo age of meters to 10 yrs., cost = 60,000 meters over 10 yrs. at $25 per meter = $1.5M, 4% accuracy improvement = savings approx. $114K per year I It.tgl_ Rk:hmoIKI UMeI I I Opportunities: Wastewater Treatment #5 Technology as Strategy contiRJed . Place a Time of Use Rider on major facility meters rate schedules and schedule Energy Audit, cost savings = 20% reduction of $1.3M = $220,000 Total technology savings $470,000 ~U*eo Opportunities: Wastewater Treatment #6 Organization as Strategy . Evaluate the Contracting Out of Non-Core Business Activities . Grounds Keeping: Saves 1 position = $24.5K Labor . Sludge hauling: Saves 4 positions = $24.5 x 4 = $98K Labor . Reduced truck cost 4 trucks x 50K mi. x $.50 per mile = $100K Total labor savings = $222,500 ~U*eo Opportunities: Customer Service/Meters #5 Technology as Strategy contiRJed . Retraining and retaining 4 readers for installation = $95,000 per year for 10 years Total technology savings = $121,500 per year ~UtIIfeo 11 I I I Opportunities: Customer Service/Meters #6 Organization as Strategy . Reduce billing frequency and balance meter reading schedule, cost to cover lost cash flow for one month = $7,700 . Postage would decrease $60,000 per year . Printing costs decrease by $12,000 per year . Data processing supplies decrease by $15,000 per year Meter reading labor savings = 50% of readers = $165K based on 14 readers@$19K+ 25% overhead I I I AIJguota-RIchmond UtiIIlIeo I I Opportunities: Customer Service/Meters I Customer Service Improvement Costs: I Startup Costs = approx. $1.8M Meter Labor Costs = $95K per year I I I I ~UtiIIlIeo I I I I I Opportunities: Customer Service/Meters #6 Organization as Strategy contirAJlld . New telephone system, cost of $225,000 . Outsource payment processing, setup cost = $59K . Cashier labor savings = 9 staff at $19K each and 25% overhead = $213K . Eliminate annored car, savings = $5K per year Total CS organizational savings = $465,000 per year ~UllItIeo Opportunities: Competitive Gap Analysis Savings 3.18 Gap = = = 2,...4 Total O&M Costs 11.7 ~UllItIeo Recommendations ~UllItIeo 12 I I I Recommendations Have Three Focus Areas I . Business Practices . Use of Technology . Skill and Compen- sation Levels I I Master Plan ~1JliIIIeI I I Implementation of Technology Solutions Improves Bottom Une I . Process control system at treatment plants reduce both Ops. and Mainl costs . CMMS coupled with improved practices saves labor costs and protects huge investment . CIS consolidates business functions and reduces labor costs I I I ~UM.. I I Conduct a Strategic Business Plan I . Define mission and vision . Describe project with cost benefits . Identify quick wins . Prioritize projects . Determine project implementation steps I I ~~ I I Business Practice Issues Foster a Culture of Competitiveness Awareness . Define future vision . Establish performance based metries . Involve managers in budget preparation . Develop a program-driven maintenance system . Redesign Customer Service functions ~UIlIIIeo Skills (& Consequently) Compensation Levels Require Upgrading to Support New Practices . Define existing and required , skill sets . Broad-banding salaries and cross-training helps integrate County and City forces . Increased skills improve personnel's job satisfaction ~UIlIIIeo Reengineering is a Six Step Process ..p' ~UIlIIIeo 13 I I I I I I I I Recommendations for Implementing the Business Strategy Plan . Apply Best Practices to O&M functions: -TPO - Program-Driven Maintenance - Unattended Facilities - Work Force Flexibility . Conduct an Organizational Readiness Assessment . Pilot Best Practice strategies in a specific section of the Dept. ~mondUtilllleo A Glimpse into the Future: Planning & Implementation I I . Establish vision for the future and a staged, multi-year plan for achieving the vision . Develop an Information and Automation Master Plan based on competitive business strategies. Plan must indude: organization, training, technology, approach, schedule, costslbenefits I I I I I I I I ~mondUtilllleo A Glimpse into the Future: Planning & Implementation ....tgUIta Rlc:hmoeKllJMel; I Recommendations for Implementing the Business Strategy Plan continued . Complete conceptual design of the technologies to support the Best Practices for the pilot . Develop a new compensation matrix and training program . Apply lessons leamed on a utility-wide basis Augusta-Rlchmond UtiItIeo First, Develop the Plan A Glimpse into the Future: Planning & Implementation Auguola-Ridlmon UtiIIIIeo 14 I I I I I I I I I I I I I I I I I I I A Glimpse into the Future: Planning & Implementation hlguota-IlIdImond UMeo A Glimpse into the Future: Planning & Implementation ~UMeo A Glimpse into the Future: Planning & Implementation ~lJMeo Questions/Comments ? . ~lMti_ 15