Measuring Performance of

Water and Sanitation Utilities

Session 4

www.wsp.org | www.worldbank.org/water | www.blogs.worldbank.org/water | @WorldBankWater

 Contents

• Learning Objectives

• Objectives of Water and Sanitation Utilities

• Ratios and Indicators Used to Evaluate Utility

Performance against Objectives

• IBNET: Information for Utility Performance

Benchmarking

• Exercise

1
Learning Objectives
 Learning Objectives

1. To understand how to use ratios and indicators to more

thoroughly understand a utility’s performance...

2. ...so as to identify risks that could impact the utility’s

future performance and its cash flow …

3. ... and identify ways to improve performance and

reduce risks

3
Objectives of Water and
Sanitation Utilities
 Objectives of Water and Sanitation Utilities

1. Accessibility Both potable water and a functioning sewage disposal system are easily
accessible to as many people as possible

2. Safety The water supplied is safe to drink (potable), with appropriate sampling,
testing, verification, and reporting systems in place.

Sewage is safely collected and disposed of, protecting the community

and the environment.

3. Sufficiency People get a sufficient quantity of water at an adequate pressure.

4. Reliability Water is continuously available, with minimum interruptions.

5. Convenience Water is accessible to the home, school or business and there is easy
access to a toilet.

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 Objectives of Water and Sanitation Utilities

6. Cost-effectiveness Service is provided cost-effectively, that is, resources are used both
effectively and efficiently

7. Financial Sufficient revenue and other income is available to operate, maintain

Sustainability and expand the assets to provide service and serviceability. Ideally
this income should come from customer revenue although it is
reasonable to use other income for growth capital.

8. Affordability Poor households can afford sufficient water to meet at least basic
needs

9. Responsiveness Utility is responsive to customers – IT IS CUSTOMER FOCUSED

10. Transparency Customers, regulators and other stakeholders have access to

information on the utility’s activities, finances and performance

6
 Relationship between Objectives and Performance
Indicators

1. Accessibility • Water coverage (population with water service/population in service

area)
• Sewerage coverage (population with sewerage service/population in
service area)

2. Safety • Does water quality meet standards?

3. Sufficiency • Sufficiency of production (liters of production per person in service

area per day)
• Sufficiency of consumption (average residential consumption of water
[liters/person/day])

4. Reliability • Average hours of service per day

5. Convenience • Type of access (improved vs. piped vs. piped to dwelling)

7
 Relationship between Objectives and Performance
Indicators

6. Cost-effectiveness • NRW (NRW/total water produced, cubic meters/connection/day)

• Collection efficiency (cash collected from customers/total
billings)
• Labor productivity (number of employees per 1000 connections)

7. Financial • Operating cost ratio (operational revenues/operational cost)

Sustainability

8. Affordability • Percent of income spent on water (data from household

surveys)
• Standard “basic needs” bill / household income
• Basic needs = 50 lpcd x number of people in household; work
out bill from tariff schedule for that quantity of water

9. Responsiveness • Number of complaints/customer

• Response to customer’s complaints

10. Transparency • Is drinking water quality data published? Independently verified?

• Wastewater treatment results
8 • Sewage flooding of homes
Ratios and Indicators Used to
Evaluate Utility Performance
against Objectives
Coverage
Quality
Operating Efficiency
Financial Performance
Coverage
 Water Coverage

population with water

Water Coverage, Selected Intermediate Cities in Latin America service/population in
100% 100% 100% 100% 100% 98% 97% 96% service area
93% 92% 91%
89%
83%
78% 76%
80%
Water Coverage, %

60%

40%

20%

0%

11
 Sewerage Coverage

Sewerage Coverage, Selected Intermediate Cities in Latin America population with

sewerage
100% 100% 93% service/population in
91% 90%
86% service area
80%
80%
77%
73%
Sewerage Coverage, %

66%
59% 56%
60%

40% 34%
29%

20%

0%

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Quality
Water Quality
Service Quality
 Safety: Drinking Water Quality

Score Utility Is drinking water quality data… Does water quality...

1 per Yes (*Regulator) …Published? …Independently verified? …Meet standards?
3 eThekwini Yes Yes Yes
3 Lusaka* Yes Yes Yes
3 Nyeri* Yes Yes Yes
3 Tanga* Yes Yes Yes
2 Aguas Maputo Yes Yes No
2 DAWASCO* Yes Yes No
2 Nairobi* Yes Yes No
2 NWSC Yes Not disclosed Yes
2 Mombasa* Yes Yes No
1 SDE No Not disclosed Yes
1 ONEA No No Yes
0 Ghana WCL No Not disclosed Not disclosed
0 Hargeisa No Not disclosed Not disclosed
0 Kaduna No Not disclosed Not disclosed
0 Regideso No Not disclosed Not disclosed
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0 SEEN No Not disclosed Not disclosed
 Reliability

average hours of
Reliability, Selected Utilities in Africa
service per day

24 24 24 23.5
24 23 22
20 20 20
Reliability (hours/day)

20 19
18
17
16 15

12 11
8
8

4 3

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 Sufficiency

300
Sufficiency of Production, Selected Utilities in Africa
262
Sufficiency of Production (lcd)

250 liters of production

per person in service
200 area per day
182 174
147
150
125 118
104 102 96
100 81 78 77 74
48 42
50
19
-

16
 Sufficiency

Sufficiency of Consumption, Selected Utilities in Africa Average residential

consumption of
water
(liters/person/day)

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Operating Efficiency
 Non-Revenue Water

60% 57%
NRW, Selected Utilities in Africa 53%
49%
50% NRW / total water produced 47% 48%
41% 42% 42%
39%
40%
33% 34%
30%
22% 24%
20%
20% 16% 17%

10%

0%

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 Collection Efficiency

cash collected from

customers/total
120% 116% Collection Efficiency, Selected Utilities in Africa
billings
103% 101%
98% 98% 97% 96% 96% 95%
100% 95% 94% 94%
Collection Efficiency

80% 78%
80%
63%
60% 55%

40%

20%

0%

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 Labor Productivity

18
Labor Productivity, Selected Utilities in Africa
16 15 16
Staff per 1,000 Connections

14
number of employees per 12
12 1000 connections
9 10
10

8 7
5 6 6
6 5
3 4 4 4
4 3
2
2

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IBNET: Your Source of
Information
Monitoring for Improved Service Provision

Water GP will help client

governments establish and
implement monitoring systems to
improve resource allocation and
service provision

• International Benchmarking
Network for Water and
Wastewater Utilities (IBNET)
• Service provider benchmarking
• National-level monitoring
• Performance and Tariff
databases
IBNET: Information Creates Demand for Better
Services

• The World Standard for the

water performance assessment
• Information from 140 countries,
4,000 water and sanitation
utilities that serve >30% of the
urban population of the
developing world
• Key information tool for
Governments, utilities and
donors
• Tool for the performance
improvement
• Tariff data from 178 countries
and counting
• The Bank tool for assessing the
governance of water services
providers
 IBNET Way Forward

Build IBNET into a key monitoring

and decision instrument in water
sector development:

• Systematic data collection and

analysis.
• Development of adjusted and
simplified data collection instruments
• Development combined scoring
system
• Integration of the WSP IBNET and its
performance tools into a day-to-day
work with water utilities
• Instruments addressing poverty,
energy efficiency and climate change
Example of Data Quality

• Water produced error

We think
10% (old poorly
calibrated production
Extreme high
meters)
• Water consumed error Extreme low
15% (partial metering)
0% 10% 20% 30% 40% 50%
• Unaccounted losses
somewhere in
between 4% and 40%
WWW.IB-NET.org
Ratios Used to Evaluate
Financial Performance
 Virtuous Circle of Performance

Financial performance and

Operating operating efficiency linked:
efficiency 1) O&M costs controlled
2) Make operational
improvements

Financial performance and

2 1 service to poor linked:
Access and 3) Generate cash or access
service for the finance to pay for network
4
poor expansion, bulk water
3
supply, etc.
Financial 4) Revenues increase
performance

Finance

29
 Affordability

• Percent of income spent on water (data from

household surveys)
• Standard “basic needs” bill / household income
• Standard “basic needs” bill / household GDP
• Basic needs = 50 lpcd x number of people in
household

For this, work out bill from tariff schedule for that
quantity

30
 Operating Cost Ratio

Operating Cost Ratio, Selected Utilities in Africa

1.60
1.45 1.43 operating
Operating Cost Coverage Ratio

1.40 1.33 1.3 revenues/operating costs

1.26 1.26
1.20 1.14
1.09
1.04 1.00
1.00 0.91 0.90
0.80
0.77 0.77
0.63
0.60

0.40 0.35

0.20

0.00

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Be Careful Using Financial Data

• Use audited financial statements

• Review notes of financial statements
 Be Careful Using Technical Data

• Technical data is may not be reviewed by auditor for

accuracy, or consistency
• Internal controls needed to ensure quality of data may
not be not be in place, or enforced
• Dates technical data gathered may not reconcile with
financial statement information …
• Or, with other technical data obtained

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 Questions?

www.wsp.org | www.worldbank.org/water | www.blogs.worldbank.org/water | @WorldBankWater

 Exercise

www.wsp.org | www.worldbank.org/water | www.blogs.worldbank.org/water | @WorldBankWater

 Exercise

• Participants will form small teams and answer questions

• Participants will extract values and calculate ratios using
the WSC Bahamas financial statements and technical
data

36
 Exercise

• What was WSC’s NRW % for 2011?

• Assuming WSC’s purchased water costs (hint: note
11) are all variable (i.e., the cost varies with the amount
of water produced), how much would WSC’s purchase
water costs decrease if NRW was decreased by 25%?

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 Thank You

www.wsp.org | www.worldbank.org/water | www.blogs.worldbank.org/water | @WorldBankWater