1. Leaders in the design, implementation and operation of markets for electricity, gas and water. Establishing standardised reporting for Water and Waste Sectors By Vera Muhaxhiri, IPA Consultant to WWRO 18 th January 2007

2. Outline I.Developing a performance reporting system for the water sector II.Knowledge transfer to the waste sector III.New reporting package in the waste sector IV.Outlook for performance reporting

3. Rationale for OFMP Performance Monitoring of Water Sector In 2003 KTA expressed to KfW its need to:  Monitor the performance of water utilities in key areas of operation and finance  Provide benchmarking against which individual utilities can be evaluated  Set targets for performance improvements in the water utilities  Base its water sector reform on uniform, transparent and accessible data  KTA set up Operational and Financial Monitoring Project (OFMP) with KfW funding

4. Core concepts of OFMP I  KPIs  Data collection  Reconciliation of financial data and verification of non-financial data  Monitoring performance against targets set by the water utilities  Database; Monitoring System  Performance and Feedback Reports

5. Core concepts of OFMP II More ….. KPIs are essential tools that are used for assessing the performance of each company individually and allow benchmarking. KPIs require data from companies (datasheet). The financial data are reconciled and added into database. The OFM System processes data to generate KPIs. KPIs are compared with targets OFM System provides in-depth analysis from which Performance and Feedback Reports are produced (monthly, quarterly and annual reporting).

6. The OFMP challenges  The first visit in water companies. Companies expressed their willingness for cooperation.  Initially only 25 data were collected which increased to 39.  Initially 10 performance indicators were generated which increased to 32.  In June 2004, the inconsistency in financial data in Q2 was €1.4m  By the end of 2004, all financial data were fully reconciled (data supplied by companies)  Performance reports were prepared and delivered to all water stakeholders.  The companies and other stakeholders showed interest in the performance reports and actively participated in workshops.

7. Performance monitoring through KPIs  Performance monitoring is a continuous process and not only a comparison of figures  Willingness to cooperate is fundamental to the success of the performance monitoring  Look for best practice inside and outside the sector  Exchange of experiences and best practice by communicating!

8. Main principles of KPIs SMART ……  Simple  Measurable  Achievable  Relevant  Time bounded

9. Reliability and Reconciliation  Reconciliation is cross-checking data for consistency by calculating them differently  Unreconciled data indicates non-reliability of data  Reconciliation ≠ Reliability  In water sector, the inconsistency of financial data for first four months of 2004 amounted to € 1,3m  Only fully reconciled data enter OFM System as of 2005  2004 data have been retroactively reconciled  Check for reliability of non-financial data (more difficult than financial data check)

10. Targets Performance assessment through actual versus targets comparisons  Targets should be agreed together with key water stakeholders.  Targets should be realistic and not too ambitious  The top management performance will be assessed by achieving or not the target set in their budget/business plans

11. Performance reports  15 Performance Reports with respect to the seven regional water utilities covering reporting periods 2004Q1 – 2006Q3  Performance reports have been sent out to nearly all water stakeholders and available through the yahoo-group and KTA website.  7 Feedback Reports for each individual water utility – supporting Supervisory Boards on making decisions

13. Performance Assessment of Water Sector ref: comparisons between 2004, 2005 and 2006 I Indicator200420052006 (I-IX) Non revenue water55%58%59% Billing percentage85%89%92% Proportion of metered customers 53%66%76% Metered consumption % 62%77%83% Collection rate59%56%55%

14. Performance Assessment of Water Sector ref: comparisons between 2004, 2005 and 2006 II Indicator200420052006 (I-IX) Working coverage ratio1.161.521.11 Working ratio1.882.171.93 Staff efficiency ( ‘ 000 cust) 8.348.107.82 Average Tariff per m30.280.290.34

15. Performance Assessment of Water Sector ref: comparisons between 2004, 2005 and 2006 III Indicator200420052006 (I-IX) Complaints per '000 customers 85 Water quality tests failed7% Water interruption per customer per day 2,81,9 Reporting delays127

16. Individual Performance Assessment 2006 I-IX IndicatorBest comp.Worst comp. Non revenue waterMITPE Billing percentageGJAGJI Proportion of metered customersGJAMIT Metered consumption %PZFE Collection rateGJIPE

17. Indicator Companies being ranked according to their best performance/ worst performance Non revenue water GJIPEPZPRGJAMITFE Billing percentage PEPZGJAGJIFEPRMIT Proportion of metered customers PRGJIGJAFEMITPZPE Metered consumption % PRGJAGJIFEMITPZPE Collection rate PRGJIPEGJAFEPZMIT Individual Performance Development Assessment 2005 I-IX - 2006 I-IX

18. Actual vs Targets 2006 I-IX

19. Convergence and divergence analysis  The convergence and divergence analysis show whether the performance of the companies are closer to one another i.e. catch-up effect (convergence) or did the companies that were already performing well/bad also improved/went down more (divergence)

21. OFCR regime  Comparable water-waste reporting systems WATERWASTE BASELINE DATA 0 #30 # DATA52 #27# INDICATORS48 #28 #

23. Outlook Moving from performance monitoring to performance improvements Company performance assessed by comparing:  to its own year to year performance developments (internal performance appraisal)  to its own targets  to sector ’ s performance  to the best performing company  to the wider region in order to deliver results similar to a competitive market.

24. Leaders in the design, implementation and operation of markets for electricity, gas and water. Thank you for your attention !