Collection and Analysis of Utility Performance

Benchmarks for Macedonia (2004-2007)

ADKOM

BENCHMARKING –DEFFINITION, OBJECTIVES AND

BENEFITS

It is understood as the process for identification, understanding and

adaptation of remarkable practices and processes of other

organizations to help the improvement of its own performance.

Providing the water companies with information that will help them to

improve their management and operation;

Allowing local and central authorities to compare water utilities

performances;

Providing key policy-makers and decision-makers with the information

they need to benchmark sector performance and organize their support;

Increase transparency towards the public by publishing the water

companies performance results and the decisions made to improve the

service quality;

Raising awareness about the interest of such an exercise and

increasing dialog between the water companies, the civil society, the

local authorities, the central government and the Donor community.

Humility to accept that there may be other

Companies with a better performance but under

similar socio-economic environment

Wisdom to learn the changes that may arise from

comparison

Ambition to introduce the necessary actions

Effectiveness to accomplish the programmed goals

THE BENCHMARKING PROCESS REQUIRES:

HISTORY OF THE BENCHMARKING PROJECT

Unknown up to 2006 - Reasons

- Limited public availability, reliability and affordability of data

- Very little information integrated in standard statistical

publications of the communal services enterprises, as well as of

the standard country statistical reports.

Realization of the project - Reasons

- The water sector currently ranks behind that of recent EU

accession countries, and especially of the EU-15, in

institutional practices (commercialization and political autonomy)

and in key performance indicators.

- Urgent need of work optimization and cost reduction

- Improvements in performance efficiency and effectiveness of

communal services enterprises

HISTORY OF THE BENCHMARKING PROJECT

There were two complementary benchmarking initiatives for Macedonia:

- 2006 by GTZ-sponsored project on the Improvement of Economic

Efficiency of Public Utility Services

- workshop organized by the World Bank and ADKOM in December

2007 on performance assessment of Macedonia water utilities according to

IBNET.

The IBNET benchmarking project realized binding on the contract signed by the

Association of communal service providers of Macedonia (ADKOM) and the

IBNET – World Bank.

ADKOM was designated to take the lead in initiating benchmarking in communal

sector service in the Strategy and Action Plan for Reform of Communal Services

Enterprises with focus on Water, Sewerage and Solid Waste Management

(Diagnostic and Strategy Final Report), prepared by Economic Consulting

Associates in association with MCIC, BAR E.C.E. and IGE Consulting.

The realization of the IBNET Benchmarking Project started in August 2008 and

ended in January 2009.

REALIZATION OF THE BENCHMARKING PROJECT

Developed performance monitoring and benchmarking of the

water sector in Macedonia through collection of technical and

financial data for the year 2004-2007 from the biggest 15 water

companies.

Company name Municipality

JPKR ”Usluga'' Berovo

JKP “Vodovod” Bitola

J K P "Standard" Debar

JP "Komunalec" Gostivar

JK Komunalec Kavadarci

KJP “Vodovod” Kocani

JP "Vodovod" Kumanovo

J.P. ”Komunalec” Negotino

MJP “Proakva” Struga

JP “Plavaja” Radovis

JKP “Proleter” Resen

JPKD “Isar” Stip

J.P.”Vodovod I Kanalizacija”-Skopje Skopje

JPKD “Komunalec” Strumica

JKP ”Derven” Veles

REALIZATION OF THE BENCHMARKING PROJECT

Developed performance monitoring and benchmarking of the

water sector in Macedonia through collection of technical and

financial data for the year 2004-2007 from the biggest 15 water

companies.

it was considered participant companies (the sample) to be

enough representatives, having in mind their capacity to supply

the most of the population in MK with water and sewerage

(representing at least 75% of Macedonian’s urban population).

The selection of separate companies that need to collect and

provide data, was on companies’ voluntary basis.

Data was collected through survey work, focus group

discussions and reports review.

The collected data are provided back in EXCEL template

format, supplied by the World Bank

Within the EXCEL sheets, key performance indicators are

calculated automatically upon inserted data and already

inserted formulas and functions.

THE APPLIED METHODOLOGY

INTERNATIONAL BENCHMARKING NETWORK

WATER AND SANITATION UTILITIES

DATA

IBNET DATA

Utility Information

Contact Information

General Information

Service Area

Staff

Water Service

Sewerage Service

Financial Information

Tariff Information

Customer Relations

IBNET INICATORS

Service coverage

Water consumption & production

Non revenue water

Meters

Network performance

Operating costs & staff

Quality of service

Billings & collections

Financial performance

Assets

Affordability / PPP

INTERNATIONAL BENCHMARKING NETWORK

WATER AND SANITATION UTILITIES

INDICATORS

DATA HAVE BEEN ENTERED, VALIDATED AND

REPORTED BY THE IBNET TOOL KIT SOFTWARE

ACTIVITIES

Initial workshop was held in Negotino (October,2008) with general

managers and technical staff of the 15th selected communal

enterprises.

The content and the importance of the Project were in details

explained.

The technical staff of each company was identified and appointed as

responsible individual project coordinators.

The EXCEL benchmarking template format for data collection was

delivered in electronic and hard format and explained to responsible.

Several group discussions have been organized with appointed

project coordinators on site, as well as through many telephone

conversations, questions and concerns were discussed and

explained.

Additional workshop was organized in Skopje (December,2008) with

project coordinators - all identified problems during data collection

and data filling in EXCEL sheets on general level were explained in

depth again

Country Report

Macedonia

Water sector performance indicators for

15 Utilities for the years 2004-2007

Indicator 2003 2004 2005 2006 2007

1.1 Water Coverage (%) 100,0 94,6 95,3 95,2 95,3

2.1 Sewerage Coverage (%) 94,3 82,3 78,4 79,2 79,5

4.1 Total Water Consumption

(l/person/day)

173,0 199,8 180,6 176,0 171,0

4.7 Residential Consumption

(l/person/day)

115,8 135,9 123,8 121,7 123,6

6.1 Non Revenue Water (%) 58,2 57,3 58,6 59,9 60,2

6.2 Non Revenue Water

(m3/km/day)

72,37 115,84 108,36 110,00 105,82

8.1 % Sold that is Metered (%) 99,2 95,9 94,2 94,2 94,0

Country Report

Macedonia

Water sector performance indicators for

15 Utilities for the years 2004-2007

Indicator 2003 2004 2005 2006 2007

11.1 Operational Cost W&WW

(US$/m3 water sold)

0,437 0,282 0,292 0,318 0,363

12.3 Staff W/1000 W pop served

(W/1000 W pop served)

2,37 1,12 1,10 1,11 1,10

18.1 Average Revenue W&WW

(US$/m3 water sold)

0,515 0,469 0,492 0,478 0,691

23.1 Collection Period (Days) 255,5 427,1 479,3 511,8 485,6

23.2 Collection Ratio (%) 121,2 84,5 86,8 84,9 83,2

24.1 Operating Cost Coverage

(ratio)

1,179 1,644 1,686 1,503 1,906

139

198

225

77

186

108 107

171

201

137

61

149

210

132

165

140

123

135

161

63

130

87

78

123.6

137

127

52

116

144

102

130

109

0

50

100

150

200

250 Total Water Consumption (l/person/day)Residential Consumption (l/person/day)

WATER CONSUMPTION AND PRODUCTUION

57 52

81 73

65 64

51 60.20

53

71

41

60 59 66

49 44

53 59

138

241

83

49

68

105.82

45

114

15 25

161

89

67 72

0

50

100

150

200

250

300 NRW (%) 2007

NRW (m3/km/day) 2007

NON REVENUE WATER

153

55

100

45

158

60

83.2

99

117 111

62 72

116

230

59

0

50

100

150

200

250

Collection Ratio (%) 2007

BILLINGS AND COLLECTIONS

0.9

0.7

2.08

2.9

1.77

1.25

0.88

1.91

3.06

1.9

0.96 1.04

3.27

1.27

2.92

1.9

0

0.5

1

1.5

2

2.5

3

3.5Operating Cost Coverage (ratio)

FINANCIAL PERFORMANCE

DISSEMINATION OF RESULTS

Hard copy and electronic copy report

Report announced and published in ADKOM’s electronic

newspaper

Results internationally presented on workshop in

Prishtina, Kosovo (June, 2009), organized by Water and

Waste regulatory office in Kosovo under the topic

“Performance evaluation of Water Companies in

Region (Albania and Macedonia) and the

comparisons with Water Sector in Kosovo”

This Project should be considered as initial step in developing benchmarking

practices in Macedonia.

The positive experience of this project was thought to motivate involved

communal enterprises in the first project to collect data for the next years and

to continue to calculate performance indicators according to IBNET

benchmarking template format, and to expand the benchmarking toward

communal enterprises, which did not participate.

Need to continue Benchmarking project among previously involved

communal enterprises and spread to new ones

The project will enhance transparency in key areas of operations, finances

and quality of services, initiate promotion of a process of improving efficiency,

target settings and cooperation between each utility, collection of data on

regular basis and benchmarking annually.

SUMMARY

While not technically difficult, it IS hard work

This is a communication project

To improve, we have to change, and change is always

hard.

Performance measurement and benchmarking mean

nothing if we don’t do something with the results.

Strategy: Start with some quick wins to get buy in, then

move to more ambitious improvement programs.

It actually works! We can easily measure progress with

numbers and facts

Breaking the habits of the past is hard ,but it MUST start.

WHAT WE HAVE LEARNED

WHY ENGAGE IN REGIONAL BENCHMARKING?

The ultimate objective for engaging in regional benchmarking is, of course,

to improve regional development. Regional benchmarking is a powerful

strategic policy tool which contributes to regional development by

effectively serving a number of key functions. These include:

Raising awareness

- One of the most important reasons and value added by

the regional benchmarking process is raising awareness of

regional stakeholders on the region’s position as compared to

other regions.

Generation of knowledge

- By learning how to effectively address major challenges based

upon others’ policy-learning experiences

Trans-regional Co-operation - Trans-regional benchmarking projects can be an opportunity

to collaborate with other regions and build trans-regional partnerships

Regional Marketing - Benchmarking can be seen as a regional marketing tool

OVERVIEW OF REGIONAL INNOVATION

BENCHMARKING METHODOLOGY

The steps for the implementation of the regional innovation

benchmarking methodology should include:

Selection of indicators

Creation of the benchmarking database

Production of the benchmarking data

Analysis and interpretation of statistics

Suggestions for improvement