developing a sustainability management plan for water...

LESAM 20072nd Leading Edge Conference on

Strategic Asset Management

Developing Sustainable Management Plans for

Water Supply within Sarawak Malaysiaby Kerry Jones & David Cox

This presentation covers the outcome from using strategic asset management approaches to develop sustainable long term strategies for management of water supply services in Sarawak Malaysia including the tools and techniques used to :– Evaluate the current situation– Identify the status of asset knowledge– Identify future asset management requirements – Develop business improvement plans– Justify future asset management strategies

Developing Sustainable Management Plans forWater Supply within Sarawak Malaysia

Sarawak???

Googled…

Sarawak Facts

• Capital is Kuching.• Largest state of Malaysia (geographically).• Joined Federation of Malaysia in 1963, after a

century of British Colonial rule.• Population of Malaysia is 26.4mil and approx 2.4mil

in Sarawak.• Indigenous tribal pop 44%, chinese 28%, other

28%.• Official language is Bahasa Melayu also known as

Malay, however other languages are common, English, Chinese & native indigenous languages.

• Major religion is Islam.

Sarawak Facts Cont…

• 'the land of the hornbill‘• ‘the land of many rivers’• Abundance of natural resources, petroleum, natural gas.• Thick lush rainforests (timber), undulating landscape. • Large timber logging industry and;• Palm oil & sago plantations.• Tropical climate

Water Supply History

• 1887, Kuching obtained water direct from a nearby stream drawingoff about 100,000 gallons per day (0.45ML/d)

• 1902, an alternative source of supply was developed near Kuching. A 3.5mil gal dam was constructed (15.75 ML).

• Demand from Kuching town increased to 500,000 gallons per day (2.25ML/d).

• Raw water of a suitable quality supply could no longer meet growing demand.

• 1957 first water treatment plant constructed 4ML/d, now 240ML/d• Trend continued, Sibu, Mukah, Miri, Bintulu and Sri Aman

Water Authorities

• First established government body to co-ordinate and facilitate water supply Jabatan Kerja Raya (JKR), Public Works Department.

• 1959 Lembaga Air Kuching (Kuching Water Board) and Lembaga Air Sibu (Sibu Water Board) took over JKR’s responsibilities in Kuching and Sibu city.

• 1995 a State Water Authority was established.• 1996 Lambaga Air Kawasan Utara (LAKU) took over other

growing cities water supply authorities, Miri, Bintulu & Limbang.

• Currently JKR’s responsibilities includes 88 water supply authorities for small towns, communities and villages (kampangs)

Treatment Plants Ranging from 300MLD

ASSET MANAGEMENT TOOLS• Workshops

• Total management planning

• Long-term financial modelling

• Organisational structural analysis techniques

• Key accountability documentation

• Activity analysis

Use of Total Management Planning to evaluate existing situation and quantify asset centric business improvement strategies

BUSINESS PLANBUSINESS PLAN

KEY RESULT AREAS

SUB-PLANS

Customer CharterCustomer Charter

GOVERNMENT OF SARAWAK

Business Development & Management

Corporate Systems Management 17


Quality Management

14

Quality Management

14

Information & Performance Management 15


Risk Management

16

Risk Management

16

Human Resources Management

18


18

Asset Management

Operations Management

4


4

Maintenance Management

5


5

Infrastructure Planning

6


6

Water Loss & Demand Management 8


Asset Procurement

9

Asset Procurement

9

Asset Evaluation& Renewal

7


7

Energy Management

11

Energy Management

11

Water Source Management

10


10

Environmental Stewardship

Environmental ManagementCo-ordination 12


Catchment Management

13


13

TRIPLE BOTTOM LINE FRAMEWORK

SUPPORTING DOCUMENTS / INFORMATION (e.g. Asset Register, Infrastructure Planning Studies, Life-Cycle Costing Procedures etc)

External Social Accountability KPIs

Financial & Asset ManagementSustainability KPIs

EnvironmentalSustainability KPIs

CustomersCustomers POLICY DOCUMENTSPOLICY DOCUMENTS

Customer Service

1

Customer Service

1

Drinking Water Quality Management

2


2

Levels of Service

FinancialSustainability

Financial ManagementPlan 3


InternalAccountability KPIs

Asset Valuation & Depreciation Policy SocialBALANCED SCORECARDAccountability Framework ©

OP

TIM

ISE

D D

EC

ISIO

N M

AK

ING

Org

anis

atio

nal

Alig

nm

ent

ANNUAL PERFORMANCE PLANANNUAL PERFORMANCE PLAN

KWB / PWD STRATEGIC PLANKWB / PWD STRATEGIC PLAN

Financial Model

Asset RenewalsNeeds Analysis

AssetRegister

Financial Forecast

BUSINESS PLANBUSINESS PLAN

KEY RESULT AREAS

SUB-PLANS

Customer CharterCustomer Charter

GOVERNMENT OF SARAWAK




Quality Management

14

Quality Management

14



Risk Management

16

Risk Management

16


18


18




Quality Management

14

Quality Management

14



Risk Management

16

Risk Management

16


18


18

Asset Management


4


4


5


5


6


6



Asset Procurement

9

Asset Procurement

9


7


7

Energy Management

11

Energy Management

11


10


10

Asset Management


4


4


5


5


6


6



Asset Procurement

9

Asset Procurement

9


7


7

Energy Management

11

Energy Management

11


10


10





13


13





13


13





13


13

TRIPLE BOTTOM LINE FRAMEWORK

SUPPORTING DOCUMENTS / INFORMATION (e.g. Asset Register, Infrastructure Planning Studies, Life-Cycle Costing Procedures etc)

External Social Accountability KPIs

Financial & Asset ManagementSustainability KPIs

EnvironmentalSustainability KPIs

CustomersCustomers POLICY DOCUMENTSPOLICY DOCUMENTS

Customer Service

1

Customer Service

1


2


2

Levels of Service

Customer Service

1

Customer Service

1


2


2

Levels of Service







InternalAccountability KPIs

Asset Valuation & Depreciation Policy SocialBALANCED SCORECARDAccountability Framework ©

OP

TIM

ISE

D D

EC

ISIO

N M

AK

ING

Org

anis

atio

nal

Alig

nm

ent

ANNUAL PERFORMANCE PLANANNUAL PERFORMANCE PLAN

KWB / PWD STRATEGIC PLANKWB / PWD STRATEGIC PLAN

Financial Model

Asset RenewalsNeeds Analysis

AssetRegister

Financial Forecast

Financial modelling used to identify funding issues

Returns from the business

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

1 2 3 4 5 6 7 8 9 10

Years - 2000/01 is year 1

%

Return on EquityDividend to EquityModified return on equityReturn on assets (EBIT)

Assets

-

200,000

400,000

600,000

800,000

1 2 3 4 5 6 7 8 9 10Years - 2000/01 is year 1

$'00

0

-

10,000

20,000

30,000

40,000

Capital Expenditure

Total Assets

Cap

ital E

xp. $

'000

Cash Flows

0

10000

20000

30000

40000

1 2 3 4 5 6 7 8 9 10Years - 2000/01 is year 1

$'00

0

Retained profitsIncome TaxDividend CashflowOperating Profit

Use of Generic Activity Frameworks to Evaluate Organisational Structures

Management Framework

ANNUAL PERFORMANCE PLAN

COMMERCIAL WATER SERVICES UNIT

CUSTOMER C

OMMITMENT

ASSET OWNER GROUP OPERATORS

Asset Owner Group• Customer Interface• Investment Planning• Total Asset Management• Core Business Support Services

SLA

Facility Management Groups

•Bulk Treatment•Reticulation Operations

‘Contestable’

SERVICE PROVIDERS

‘Contestable’ SLA

SLA

External Service Providers

Council Provided Services

Project Management Groups

• Construction Groups• Capital Works Projects• Major Periodic Maintenance Projects

• Planning and Design Groups• Strategic Planning• Network Investigation• Project Management• Development Areas

Business Management Services Groups

SLA


ANNUAL PERFORMANCE PLAN


CUSTOMER C

OMMITMENT

ASSET OWNER GROUP OPERATORS

Asset Owner Group• Customer Interface• Investment Planning• Total Asset Management• Core Business Support Services

SLA


•Bulk Treatment•Reticulation Operations

‘Contestable’

SERVICE PROVIDERS

‘Contestable’ SLA

SLA


Council Provided Services


• Construction Groups• Capital Works Projects• Major Periodic Maintenance Projects

• Planning and Design Groups• Strategic Planning• Network Investigation• Project Management• Development Areas

Business Management Services Groups

SLA

Use of Key Accountability Documentation to define all Relationships

Defined Relationships

Purchaser/Regulator/Owner

State Govt

Redefined in termsof:

·Owner of CBU

·

Regulator

·

Service Provider

·Service Purchaser

Roles and Responsibilities defined by:

Annual Performance PlanCustomerGuarantee

Regulatory Framework Business PlanTMP· Customer Charter

· Tax EquivalentsSupply Contracts· Debt Guarantee

· Compliance with regulationsBenchmarking(Planning, Environment and Council)

Marketing Plan

Full Cost PricingService Level Agreements

CSO and SLAs

Business UnitRedefined in termsof:

· Customers

· Shareholders

· Suppliers

· Competitors

Supported byCommercial BusinessSystems

QMS IMS FMS

Accountability Service Provider

“ ”

REGULATORY FRAMEWORK

Evaluation of Current Regulatory ArrangementsThe most significant observation on the existing

regulatory framework was the absence of requirements for: -

• asset management planning;• infrastructure performance monitoring and

reporting;• customer service performance monitoring and

reporting; and• best practice governance framework for ownership

of long life assets.

We recommend that the existing regulatory framework be enhanced through:

• mandating of asset management planning and auditing of water supply agencies performance against their asset management plans; mandating establishment of customer service targets and annual performance reporting;

• Establishment of a government agency responsible for a water industry regulation including asset management regulation ;

• enhancement of the functions of asset ownership so all State owned water infrastructure is managed for performance and outcomes.

Recommended Organisational Arrangements & Regulatory Framework

Commercialised State Government

Department

Commercialised State Government

Department

JKRDepartment

State Water Regulator

State Water Regulator

Existing Support for SWA

Existing Support for SWA

Existing Support

for SWSCC

Existing Support

for SWSCC

Enhanced KuchingWater Board

Enhanced Water Boards

Rural WS

Water Supply Branch

Water Supply Branch

Urban WS Close to

Water Boards

KWBWB

New Regulatory Framework

Control Centre & Telemetry


Planning & Construction

Group

Planning & Construction

Group

Revenue Collection

Revenue Collection

Existing

Recommended



Asset Management

Group

Asset Management

Group

Asset Management

Group

Asset Management

Group

FINANCIAL SUSTAINABILITY

-100,000

-50,000

0

50,000

100,000

150,000

200,000

250,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

OperatingProf it

capitalcommitment

Cash Flow

Debt Level

CSOs

Capital Grants

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

OperatingProfit

capitalcommitment

Cash Flow

Debt Level

Agency 2

-50,000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

OperatingProf it

capitalcommitment

Cash Flow

Debt Level

Agency 3

Agency 1

Each agency required a different financial strategy

The Agencies have many Management Strengths:• Capability of customer information systems and reporting

of customer information;• Quality systems and use of 5S;• Dedication of staff and management enthusiasm for

quality outcomes;• Performance measurement;• Use of variable speed pumping by zoned water supply

system Sibu Water Board;• Use of WTP SCADA by Sibu Water Board.

However the Management Challenges included:

• One agency currently operating in a cash flow negative position;

• Public sector constraints and requirements from permanent positions;

• Lack of management autonomy;• Limited Mechanisms for ongoing review of tariff

and charges;• X-subsidies from commercial to domestic;• Expectations to extend systems into rural areas.

We concluded that Agencies could Improve:• Asset Management and Total Life Cycle costing

approaches;• Use of monitoring and telemetry;• Trending analysis of data currently being collected in

particular analysis of reservoir level and pump station data to identify NRW hotspots;

• Optimisation of energy consumption;• Maintenance of telecommunications and SCADA

equipment;• Network modelling and NRW capability;• The level and hierarchy of infrastructure plans;• Capital works planning capacity and capability.

Use of Organisational structural analysis to identify areas for asset management

capacity improvement

Agency 1 Organisational Analysis

Govt Provided Services


�ANNUAL PERFORMANCE PLAN

CUSTOMERCOMMITMENT

�ASSET OWNER GROUP

�Asset Owner Group

�Customer Interface

�Investment Planning

�Total Asset Management

�Core Business Support Services

SLA


�Bulk Treatment

�Reticulation Operations

�Operations Centre, telemetry and instrumentation

�Accountability

�Accountability

SLA

SLA



� Construction Program Managers

� Capital Works Projects

� Major Periodic Maintenance Projects

� Planning and Design Groups

� Strategic Planning

� Network Modelling

� Project Management

� Development Areas

�Business Management Services Groups

� Finance

� IT

� HR

� Administration

� Metering

� Security

SLA




WATER SERVICES UNIT

CUSTOMERCOMMITMENT

�ASSET OWNER GROUP

�Asset Owner Group

�Customer Interface

�Investment Planning

�Total Asset Management

�Core Business Support Services

SLA


�Bulk Treatment



�Accountability

�Accountability

SLA

SLA



� Construction Program Managers

� Capital Works Projects

� Major Periodic Maintenance Projects

� Planning and Design Groups

� Strategic Planning

� Network Modeling

� Project Management

� Development Areas


� Finance

� IT

� HR

� Administration

� Metering

� Security

SLA

Agency 2 Organisational Analysis





CUSTOMER

COMMITMENT

�ASSET OWNER GROUP �OPERATORS

Asset Owner Group�Customer Interface�Investment Planning�Total Asset Management�Core Business Support Services

SLA


�Bulk Treatment



�‘Accountability’

� PROJECTSERVICE

PROVIDERS


SLA

SLA



× Construction Program Managers× Capital Works Projects× Major Periodic Maintenance Projects

× Planning and Design Groups× Strategic Planning× Network Investigation× Project Management× Development Areas


� Finance

� IT

� HR

� Administration

� Metering

� Security

SLA





CUSTOMER

COMMITMENT

�ASSET OWNER GROUP �OPERATORS

Asset Owner Group�Customer Interface�Investment Planning�Total Asset Management�Core Business Support Services

SLA


�Bulk Treatment




� PROJECTSERVICE

PROVIDERS


SLA

SLA



× Construction Program Managers× Capital Works Projects× Major Periodic Maintenance Projects

× Planning and Design Groups× Strategic Planning× Network Investigation× Project Management× Development Areas


� Finance

� IT

� HR

� Administration

� Metering

� Security

SLA

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