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Economy and Education

3.1.02 Peak performance indicators – professional management in the water industry

Quality, supply reliability, customer service, sustainability and efficiency are important target variables in the water supply sector. To raise its effectiveness in these key areas, the water industry is increasingly relying on performance indicators – a business tool that is already used successfully in industrial applications. The IWW Water Centre (Rheinisch-Westfälisches Institut für Wasserforschung) has developed a performance indicator system that has now become the industry standard. It is based on a model of the International Water Association (IWA) and supports the process analysis of water production and examination of sustainability aspects of the water supply.

To exploit all means of cost reduction and identify any optimisation potential, the companies of the water industry require a suitable database. More and more of these operations are therefore employing indicator systems, since they supply reliable information to act as a basis for business decisions but can also be used for benchmarking purposes – i.e. comparisons with other companies in the sector. Company management can thus monitor the development of their operation, establish in what areas it performs better than the competition and identify where a need for improvement exists.

The aim of the project “Performance indicators for water supply services: Field test of the IWA performance indicator system”, which was conducted by the IWW and funded by the BMBF, was to create and test an indicator system for the German water industry on the basis of international standards. 14 operations joined the project group and agreed to test and develop the system over the course of three survey periods.

Performance indicator system of the IWA

The IWA indicator system has eight key characteristics:

  • The system contains all tasks of a water supplier, organised into the areas of technology and administration.
  • The hierarchical structure of the system enables interlinking of all performance indicators – from main tasks, subtasks and individual tasks to specific processes, with an increasing level of detail.

From highly aggregated performance indicators for assessing the overall company to detailed process indicators

From highly aggregated performance indicators for assessing the overall company to detailed process indicators
From highly aggregated performance indicators for assessing the overall company to detailed process indicators
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  • All terms, derivations and data structures (e.g. financial structure) are uniquely defined.
  • In the data model, all entered information is evaluated as to its reliability and accuracy.
  • Depending on the user group (e.g. companies, authorities, trade associations, banks) the performance indicator system and the weighting of the indicators can be flexibly adapted to different requirements.
  • The system is designed for electronic data processing – a mandatory requirement for the continuous use of performance indicators as a management tool. Companies will find the process much easier if they collect data variables before calculating and evaluating the performance indicator results.
  • To support the persons responsible for the operations in interpreting the indicator results, the German IWA manual provides context information relating to corporate structures (e.g. size, legal form, management systems), supply systems (e.g. protected areas, wells, water works, pipeline data) and supply areas (e.g. topography, soil condition).
  • A total of 55 performance indicators and 19 context information items are assigned to the five main features of the drinking water supply – reliability, quality and sustainability of the supply, customer service and efficiency.

Multiple benefits

Continuous indicator analyses and comparisons are not only an excellent means of identifying and eliminating weaknesses in a company. Based on the experiences of the operations involved in the project, the system also offers a range of additional benefits:

  • The system necessitates the creation and maintenance of a structured data model that reflects the conditions within the company.
  • The tasks, workflows and results for all performance features become more transparent.
  • The system enables the conclusion of target-oriented agreements with the responsible company divisions, which promotes cost awareness and efficiency in the maintenance of quality and reliability.
  • The decision-makers are better able to assess where co-operation with external partners (e.g. utility companies, service providers) would be beneficial, since they may be able to deliver a specific service in a more efficient manner.
  • Delivered services and rectified deficiencies can be made transparent to the public.

Practical and successful

The practical and internationally compatible IWW performance indicator system, with its specific enhancements, has since been widely accepted in practice and has become the industry standard for German water supply services. More than 500 water supply companies throughout the German-speaking region have used the system in numerous benchmarking projects.

Pipes and fittings in a water works (filter outlet and flush water distribution)

Pipes and fittings in a water works (filter outlet and flush water distribution)
Pipes and fittings in a water works (filter outlet and flush water distribution)
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Well chamber and turbine in a water works

Well chamber and turbine in a water works
Well chamber and turbine in a water works
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Based on this wide-spread application, the IWA system became the focus of a joint follow-up project entitled “Sustainability of water services” conducted by the IWW, the Institute for Social-Ecological Research (ISOE) and the Regional Planning and Environmental Research Group (ARSU). In the context of a detailed efficiency and performance analysis of the operational processes employed in water production, the project also served as the starting point for a joint research venture between the IWW and the Technische Universität Hamburg-Harburg (Hamburg University of Technology) entitled “Development and practical test of process indicators for the management, supply and treatment of water”.

The project gave rise to the following publication, among others: “Kennzahlen für Benchmarking in der Wasserversorgung. Handbuch zur erweiterten deutschen Fassung des IWA-Kennzahlensystems mit Definitionen, Erklärungsfaktoren und Interpretationshilfen” [Performance indicators for benchmarking water supply services. Handbook for the extended German version of the IWA performance indicator system with definitions, explanatory factors and interpretation aids] (wvgw Wirtschafts- und Verlagsgesellschaft Gas und Wasser mbH, Bonn 2005 – ISBN 3-89554-152-4)

IWW Rheinisch-Westfälisches Institut für Wasserforschung gemeinnützige GmbH
Dr.-Ing. Wolf Merkel
Chief Technical Officer
Moritzstr. 26
45476 Mülheim an der Ruhr, Germany
Tel.: +49(0)2 08/4 03 03-0
Fax: +49(0)2 08/4 03 03-80
E-mail: info@iww-online.de
Internet: www.iww-online.de
Funding reference: 02WT0224
Ressource Wasser
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