LESAM nd Leading Edge Conference on Strategic Asset Management

Transcription

1 LESAM nd Leading Edge Conference on Strategic Asset Developing Sustainable Plans for Water Supply within Sarawak Malaysia by Kerry Jones & David Cox

2 Developing Sustainable Plans for Water Supply within Sarawak Malaysia 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

3 Sarawak???

4 Googled

5 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.

6 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

7 Water Supply History 1887, Kuching obtained water direct from a nearby stream drawing off 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 first water treatment plant constructed 4ML/d, now 240ML/d Trend continued, Sibu, Mukah, Miri, Bintulu and Sri Aman

8 Water Authorities First established government body to co-ordinate and facilitate water supply Jabatan Kerja Raya (JKR), Public Works Department Lembaga Air Kuching (Kuching Water Board) and Lembaga Air Sibu (Sibu Water Board) took over JKR s responsibilities in Kuching and Sibu city a State Water Authority was established 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)

9 Treatment Plants Ranging from 300MLD

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11 ASSET MANAGEMENT TOOLS Workshops Total management planning Long-term financial modelling Organisational structural analysis techniques Key accountability documentation Activity analysis

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

13 GOVERNMENT OF SARAWAK Organisational Alignment Customers Customers Customer Customer Charter Charter KWB KWB / / PWD PWD STRATEGIC STRATEGIC PLAN PLAN ANNUAL ANNUAL PERFORMANCE PERFORMANCE PLAN PLAN BUSINESS BUSINESS PLAN PLAN POLICY POLICY DOCUMENTS DOCUMENTS Levels of Service Financial Sustainability Asset Environmental Stewardship Business Development & KEY RESULT AREAS Customer Service Customer Service 1 1 Financial Financial Plan 3 Plan 3 Operations Operations 4 4 Water Loss & Water Loss & Demand Demand 8 8 Environmental Environmental Co-ordination 12 Co-ordination 12 Quality Quality OPTIMISED DECISION MAKING Drinking Water Drinking Water Quality Quality 2 2 Financial Forecast Financial Model Asset Renewals Needs Analysis Asset Register Maintenance Maintenance 5 5 Infrastructure Infrastructure Planning Planning 6 6 Asset Evaluation Asset Evaluation & Renewal & Renewal 7 7 Asset Asset Procurement Procurement 9 9 Water Source Water Source Energy Energy Catchment Catchment Information & Information & Performance Performance Risk Risk Corporate Corporate Systems Systems Human Resources Human Resources SUB-PLANS External Social Accountability KPIs Financial & Asset Sustainability KPIs Environmental Sustainability KPIs Internal Accountability KPIs TRIPLE BOTTOM LINE FRAMEWORK Asset Valuation & Depreciation Policy Social BALANCED SCORECARD Accountability Framework SUPPORTING DOCUMENTS / INFORMATION (e.g. Asset Register, Infrastructure Planning Studies, Life-Cycle Costing Procedures etc)

14 Financial modelling used to identify funding issues Returns from the business 9.0% 8.0% Return on Equity Dividend to Equity Modified return on equity Return on assets (EBIT) % 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% Assets Capital Expenditure Total Assets 1.0% 0.0% 800, Years /01 is year 1 600,000 $' , ,000 - Cash Flows Years /01 is year ,000 30,000 20,000 10,000 Capital Exp. $'000 Retained profits Income Tax Dividend Cashflow Operating Profit $' Years /01 is year 1

15 Use of Generic Activity Frameworks to Evaluate Organisational Structures CUSTOMER COMMITMENT ANNUAL PERFORMANCE PLAN ASSET OWNER GROUP Asset Owner Group Customer Interface Investment Planning Total Asset Core Business Support Services COMMERCIAL WATER SERVICES UNIT OPERATORS Contestable Facility SLA Groups Bulk Treatment Reticulation Operations Contestable S L A SERVICE Project Groups PROVIDERS Construction Groups Capital Works Projects Major Periodic Maintenance Projects Planning and Design Groups Strategic Planning Network Investigation Project Development Areas SLA Business Services Groups SLA External Service Providers Council Provided Services Framework

16 Use of Key Accountability Documentation to define all Relationships Defined Relationships Purchaser/Regulator/ Owner Accountability Service Provider State Govt Redefined in terms of: Owner of CBU Roles and Responsibilities defined by: Annual Performance Plan Customer Guarantee Business Unit Redefined in terms of: Customers Regulator Regulatory Framework Customer Charter Tax Equivalents Debt Guarantee Compliance with regulations (Planning, Environment and Council) Business Plan TMP Supply Contracts Benchmarking Marketing Plan Shareholders Suppliers Competitors Service Provider Service Purchaser Full Cost Pricing Service Level Agreements CSO and SLAs Supported by Commercial Business Systems QMS IMS FMS

17 REGULATORY FRAMEWORK

18 Evaluation of Current Regulatory Arrangements The 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.

19 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.

20 Recommended Organisational Arrangements & Regulatory Framework Existing Department JKR KWB Water Water Supply Supply Branch Branch Existing Existing Support Support for for SWA SWA Existing Existing Support Support for for SWSCC SWSCC Recommended State State Water Water Regulator Rural WS New Regulatory Framework Commercialised State Government Department Revenue Control Asset Revenue Control Asset Collection Centre & Collection Centre & Telemetry Group Telemetry Group Urban WS Close to Water Boards Enhanced Kuching Water Boards Control Planning & Asset Control Planning & Asset Centre & Construction Centre & Construction Telemetry Group Group Telemetry Group Group

21 FINANCIAL SUSTAINABILITY

22 Each agency required a different financial strategy 250,000 Operating Profit capital commitment Cash Flow 200, , ,000 Agency 1 Debt Level 50,000 CSOs Capital Grants 0-50, , Operating Profit capital commitment 500, , , , ,000 Agency 3 Operating Profit capital commitment 1,000, , ,000 Agency 2 Cash Flow Debt Level 250, , , ,000 50,000 Cash Flow 400, , Debt Level 200, ,000

23 The Agencies have many 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.

24 However the 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.

25 We concluded that Agencies could Improve: Asset 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.

26 Use of Organisational structural analysis to identify areas for asset management capacity improvement

27 Agency 1 Organisational Analysis ANNUAL PERFORMANCE PLAN WATER SERVICES UNIT CUSTOMER COMMITMENT ASSET OWNER GROUP Asset Owner Group Customer Interface Investment Planning Total Asset Core Business Support Services S Accountability L A Accountability Facility Groups SLA Bulk Treatment Reticulation Operations Operations Centre, telemetry and instrumentation SLA Project Groups Construction Program Managers Capital Works Projects Major Periodic Maintenance Projects Planning and Design Groups Strategic Planning Network Modelling Modeling Project Development Areas Business Services Groups Finance IT HR Administration Metering Security External Service Providers SLA Govt Provided Services Framework

28 Agency 2 Organisational Analysis ANNUAL PERFORMANCE PLAN COMMERCIAL WATER SERVICES UNIT CUSTOMER COMMITMENT ASSET OWNER GROUP Asset Owner Group Customer Interface Investment Planning Total Asset Core Business Support Services S Accountability L A Accountability OPERATORS Facility Groups SLA Bulk Treatment Reticulation Operations Operations Centre, telemetry and instrumentation SLA PROJECT SERVICE PROVIDERS Project Groups Construction Program Managers Capital Works Projects Major Periodic Maintenance Projects Planning and Design Groups Strategic Planning Network Investigation Project Development Areas Business Services Groups Finance IT HR Administration Metering Security External Service Providers SLA Govt Provided Services Framework

29 Any Questions???