Water Journal : Water Journal December 2013
33 Feature Article DECEMBER 2013 WATER Increasingly, water utilities worldwide face dif cult challenges in identifying and implementing the dramatic changes necessary to meet ever increasing service level expectations, while also reducing the tariff paid by water services consumers. The slow pace of internal incremental improvement programs, or varied success in the implementation of consultants' recommendations, can leave utilities with a shortfall in meeting improvement targets, thus creating a burning platform for transformation and innovation. One approach has been to achieve these transformations through outsourcing or privatisation, which can produce dramatic change -- but the process can be subject to risks. There is an opportunity, therefore, to nd a way to blend the talents of both the public and private sectors, and bring global reach to all utilities to achieve improvement in the quality and cost of public services. A new form of Public Private Partnership (PPP) is now in progress at the New York City Department of Environmental Protection (NYCDEP), where a program known as Operational Excellence (OpX) is incorporating best worldwide practices in water and wastewater to achieve substantial savings, without outsourcing or privatisation. The model, known variously as Peer Performance Solutions (PPS) or Utility Performance Contracting, combines much of the incentivisation and accountability of more common PPP models through the remuneration model, with the relative ease and political and social acceptability of consulting services. PPS focuses on delivering veri ed and sustainable improvement in performance and cost savings. Commercially, reward for the private partners is driven directly by the actual, veri ed and realised savings made, or the achievement of other non- nancial KPIs in a manner similar to some alliance contracts. Crucially, this means that relevant changes to methods, systems or management must be implemented and effective in the utility before payments are made, providing a powerful incentive to ensure successful and sustainable change management within the organisation. In New York City, Veolia and McKinsey and Company are working with the city's Department of Environmental Protection (DEP) under this model to deliver over $100 million in net sustainable annual savings and revenue improvements over four years. Veolia is paid primarily on the basis of a share of the actual value created for the utility during the three-year implementation A PPP FOR OPERATIONAL EXCELLENCE IN NEW YORK Rod Naylor discusses a new form of Public Private Partnership in progress at the NYC Department of Environmental Protection. Peer Performance Solutions (PPS) Partnerships.
Water Journal November 2013
Water Journal February 2014