Development of a simplified concept for process benchmarking of urban wastewater management

eveloping countries, lack of funds for operation and maintenance activities is the major problem of drainage companies. The source of financing for these companies is from province or city budget and only satisfies 50-70% of requirements for activities of companies. Therefore, the drainage services are targets achieved in only half of urban areas. The activities of maintenance such as dredging sewers are not conducted fully. In fact, these above tasks are often concentrated before coming rainy seasons to reduce floodings. As a result, many canals and ditches are normally full of sediments. Many covers of sewer systems are missing, and broken pipelines are not replaced (Trinh, 2007). . In order to give financial support for the activities of urban drainage companies, the government issued the Decree 67/2003 about the environmental protection fee and Decree 88/2007 about the wastewater drainage fee. Decree 88/2007 regulates wastewater discharge fee for both households discharging wastewater directly into the environment and households connected to public sewer system. The former ones have to pay fee as regulated in Decree 67/2003 and this kind of fee will be sent totally (decree 26/2010) to local budget spending on activities of environmental protection, sewer maintenance and rehabilitation... The latter ones have to pay discharge fee included in water price and based on the volume and concentration of wastewater. The source from wastewater discharge fee is used for the operation and maintenance of sewer systems. 1.4.5 Legal and Institutional Frameworks In November 2009, the Prime Minister approved the decision 1930/QĐ-TTg about the urban development orientation until 2025 and vision toward 2050. This decision regulates that by 2050, big towns of class IV or higher will have the complete drainage system for collection of stormwater and wastewater treatment. In small towns (class V) or craft villages, wastewater is collected and treated in centralized or decentralized treatment stations. The problem of flooding will be eliminated in urban areas and wastewater needs to be treated before discharging in the environment. The detailed tasks of stormwater treatment, sewer operation and maintenance and wastewater treatment in urban areas, craft villages, hospitals and industrial zones of the three years: 2015, 2020 and 2025 are also orientated. 41 The government also issued Decree 88/2007 in May 2007 of wastewater drainage in urban areas. The decree regulates some policies for drainage investment and development, defines the responsibility in public management regarding drainage activities from planning to investment, management, operation to fee collection. Up to now, a legal framework for urban drainage sector can be considered as complete. However, inefficient and non-unified norms and unit prices across provinces are constraints for the implementation of these legal documents. 1.4.6 Investment and Management of Urban Drainage System Drainage projects require large amount of capital and the benefit that service providers get from their services seems to be not much; thus it does not receive much concern from private investors. At present, the source for capital investment is from the government. As regulated in Decree 16/2005/NĐ-CP, urban drainage projects which have an investment capital of less than 5 billion VND are decided by the chairman of provincial people’s committee. According to the Budget law and Decree on urban drainage, besides state budget the authorities of district and cities are permitted to mobilize capitals from organizations and individuals based on the voluntary principle. This regulation significantly supports small projects to improve environmental protection in poor residential areas of communes and small towns. This is a kind of community development, proposed by community, self contribution and self management (Trinh, 2007). . District or provincial people’s committee establish project management units and distribute the investment capital. The shortcoming of this management model is that urban drainage companies and project management units have little connection. Project management units are not directly in charge of operation and management of the system and this is the reason leading to “added costs” in construction period; thus investment capital is often higher than estimated costs (Trinh, 2007). 42 CHAPTER II Benchmarking in the Urban Wastewater Management Sector Benchmarking has been developed in the water industry of many countries. Initial success from these models indicates that benchmarking is a potential tool to improve the performance of undertakings by finding the best performers, learning and adapting. In this chapter, the fundamentals of benchmarking, benchmarking in the water context as well as in wastewater services will be introduced. 2.1 Fundamentals of Benchmarking 2.1.1 Definition of Benchmarking There are some theories about the origin of the word “benchmarking”, where it really comes from. One of these theories says that it comes from a British word used in terrain as a reference point where others can relate to and compare with (Frøydis et al., 2005). Another theory claims that “benchmarking” was first used in fishing business. The fish was placed on the bench then measured the length by using a knife to make a mark in the bench. Size of the next fish is compared with the previous one by putting on the bench (Anderson & Petterson, 1996). The similar point of these theories is that benchmarking can be considered as a kind of standard that others can compare with. The American Water Works Association has defined Benchmarking as “a systematic process of searching for best practices, innovative ideas, and highly effective operating procedures that lead to superior performance and then adapting those practices, ideas, and procedures to improve the performance of one’s own organization” (Parena & Smeets, 2001). Another definition from Bjorn Anderson & Petterson, 1996 referred to the continuity of benchmarking: “Benchmarking is the process of continuously measuring and comparing one’s business processes against comparable processes in leading organizations to obtain information that will help the organization identify and implement improvements”. Benchmarking was first time introduced by Xerox in the late 1970s to compare against the toughest competitors. The comparison focused more on operational performance in addition to the traditional financial measures. There were few or no elements of exchanging 43 and learning. Nowadays benchmarking is a far more powerful tool covering many industries and the final purpose is learning from others to become the best. The objectives of benchmarking are: (1) to achieve improvements by learning from others who are better, preferably the best, (2) to create an understanding of the company’s business process, (3) to create an urgent need for change and improvement to adapt with changing customers’ demands, (4) to develop strategic and operational goals and (5) to encourage creative thinking (Anderson & Petterson, 1996). 2.1.2 Types and Elements of Benchmarking 2.1.2.1 Types of Benchmarking The classification of benchmarking is based on what is compared and whom it is comparing with. Based on the object or what to benchmark, three types of benchmarking can be defined: (1) performance benchmarking, (2) process benchmarking, (3) strategic benchmarking (Anderson & Petterson, 1996). As considering whom benchmarking compare against or the level of benchmarking, it can be classified into four types: (1) internal benchmarking, (2) competitive benchmarking, (3) functional benchmarking, (4) generic benchmarking (Anderson & Petterson, 1996). All these kinds of benchmarking will be referred briefly in this section. Benchmarking of what Performance benchmarking is comparison of performance measures such as reliability, quality, speed and other product or service characteristics. The purpose of this type of benchmarking is to determine how good a company is compared to others (Anderson & Petterson, 1996; Lankford, 2002). If learning, adapting and improvement are the results of a benchmarking study, it also requires the focus on causes of the gap. The process itself has to be analyzed not only the measures and this is the purpose of process benchmarking (Anderson & Petterson, 1996). Details about the processes, how they work, which technologies they are using will be covered in process benchmarking (Sjøvold et al. 2005). Strategic benchmarking looks for the strategic planning and positioning of a company that makes them succeed. The results of strategic benchmarking are long-term (Lankford, 2002). 44 Benchmarking against whom Internal benchmarking is the comparison between departments, units or countries in the same company or organization. “Internal benchmarking is normally used within large corporations where different units are evaluated and compared to each other. If one unit works better than the others, practices can be transferred internally for improvement”. The advantage of internal benchmarking is often easy to define comparable processes, to get data and information and often on a standard form (Anderson & Petterson, 1996). Competitive benchmarking is the most difficult type to practice. The obvious limitation is the sharing of information between competitors. This type of benchmarking measures the performance, products, and services of an organization against its competitors in the same industry. Competitive benchmarking requires extensive research and focus on direct competitors not the whole industry (Lankford, 2002). Functional benchmarking is the comparison about a specific company function (e.g. maintenance) against that function in other company, a non competitor one. This type of benchmarking is relatively easy to implement (Barends, 2004) Generic benchmarking is finding companies in completely unrelated industries that perform similar processes to transfer information. The potential for identifying new technologies or practices that will lead to breakthroughs is highest in this form of benchmarking (Anderson & Petterson, 1996). 2.1.2.2 Elements of Benchmarking Benchmarking is a continuous process including many steps. Figure 2.1 describes the five main steps of a benchmarking process. This model illustrates which steps and in which sequence they should be performed in a benchmarking study. The descriptions of these steps are adapted from Anderson & Petterson, 1996. 45 Figure 2.1 Main steps of a benchmarking process (Source: Anderson & Petterson, 1996) Plan. Benchmarking studies have shown that planning is the most important step and consumes about 50% of the whole process. The activities in the planning step include (1) select the process to benchmark, (2) form a benchmarking team, (3) understand and document the process to be benchmarked and (4) establish performance measures for the process. Search. The responsibility of this step is to find the benchmarking partner. Firstly, the list of criteria that a benchmarking partner should have is established. Then search for organizations that have better performances in the desired process. After finishing the list of potential partners, the best ones will be selected. The last thing needed to do in this step is to ask for participation of these partners in the benchmarking study. Observe. The purpose of observing step is to understand the benchmarking partners. Tasks included in this step are: (1) assessment of information requirement, (2) selection of method used to collect data and (3) observe and ask for information. In observing step information should be collected at these following levels: “(1) performance level, which indicates how well the partner is compared to others, (2) methods and practices, which make it possible to achieve performance levels, (3) enablers, which make it possible to perform the process according to these practices or methods”. 46 Analyze. In this step, the information and data will be collected and analyzed to find out the gaps in performance level between the own and partner’s process and all the potential causes for this gap. Adapt. The main purpose of any benchmarking study is adapting and improvement. If this is not the result, the potential of benchmarking has not been fully utilized. This step includes following tasks (1) communicate the findings from the analysis, (2) establish functional goals for the improvement, (3) design an implementation plan for the improvement, (4) put the plan into action, (5) monitor the progress and adjust, (6) final report for the study. One thing that should be noted in this step is the acceptance of process owner and people who are affected by the changes in processes before any implementation. Recycle. To get an improvement, benchmarking should be continued by adjusting the benchmarks for already done processes and benchmarking new areas or processes. 2.2 International Benchmarking System in Water Industry 2.2.1 Benchmarking of large Municipal Wastewater Treatment Plants in Austria The Austrian benchmarking system for wastewater treatment plants had been developed from 1999 and 2004. Up to now, approximately 100 plants with size of 2000 to 1 million people equivalents have been analyzed (Report of EWA&DWA workshop, 2009). The main objective of Austrian benchmarking system is to set process indicators, to identify the best practice and benchmarks. Comparing the performance of a wastewater treatment plant with the benchmark potentials of cost reduction and optimization can be derived (Lindtner et al., 2008). Four main processes and two support processes were defined (see fig. 2.2). Each main process was divided into sub-processes. All relevant costs such as yearly total costs, operation and maintenance costs are allocated in these categories. 47 Figure 2.2 Extended process model for wastewater treatment plants above 100,000 PE (Source: Lindtner et al., 2008) In order to gain comparable process indicators the treatment plants were grouped according to capacity ranges. Benchmark plants are the plants which showed the lowest cost and meet the following criteria: (1) the effluent quality must comply with Austrian emission standards, (2) defined data checked by mass balance or other reliable criteria, (3) typical characteristics of municipal wastewater (no dominant industrial influence) (Report of EWA&DWA workshop, 2009). The benchmarking processes can be divided into three steps: (1) data acquisition, (2) data processing and (3) exchange of experiences. The data acquisition, data transfer and communication with participants are via internet (Report of EWA&DWA workshop, 2009). There are two types of data: operating data changing yearly and conservative data such as design capacity, tank volume only changing in case of upgrading. The former data is required to update each benchmarking year and the latter is only edited if necessary (Lindtner et al., 2008). Data quality assessment is achieved by means of plausibility check to ensure that data meet a feasible range. Financial data is checked by variance analysis in which the data is compared with the previous year values (Report of EWA&DWA workshop, 2009). The exchange of experiences consists of an individual consulting and workshops. Individual consulting is the meeting of a benchmarking expert and plant manager to discuss about the data quality problems and final draft report. After this discussion the corrected data or improved data are introduced to the final report. To achieve the purpose of learning from the best, workshop were organized for benchmarking participants (Lindtner et al., 2008). 48 Figure 2.3 Methodology for the development of process performance indicators (Source: Report of EWA&DWA workshop, 2009) Benchmarking studies in wastewater treatment plants show that specific total yearly cost varied from 26 € (for the bigger plants) to 71 € (for the smaller plants) per PE per year corresponding to COD110 (110 g COD/ p.e. /d). The operating costs are in the range of 10 - 22 €/PE/a, where mechanical-biological wastewater treatment account for 45% and the rest 55% is for additional sludge treatment and disposal (Lindtner, et al., 2004) 2.2.2 Benchmarking in Canada The Canadian National Water and Wastewater Benchmarking Initiatives started a project in 1997 for wastewater sector in four participating cities. In 2001, the project was extended to the water supply sector. The current project covers 42 facilities from both water supply and wastewater sector (Koelbl, 2009). Process benchmarking activities have been carried out together with corporate (metric) benchmarking activities since 2001 and worked out by various process benchmarking task forces including members of participants. The responsibility of these task forces is to identify related best practice sources (e.g. methodologies of participants, International Water Association (IWA), to set an action plan for participants according to adopted best practices and to build up networks between experts and participants, piloting the implementation in few facilities then refining the best practice for general use (Koelbl, 2009). 49 Current process benchmarking projects are carried on these following topics: (1) water loss management, (2) maintenance planning (collection, distribution, and drainage), (3) complex facilities maintenance planning, (4) sustainable funding through asset management, (5) wastewater treatment plant optimization, (6) energy management, (7) inflow and infiltration, (8) succession planning, (9) attendance management, (10) storm-water management (Koelbl, 2009). 2.2.3 North European Benchmarking Co-operation North European Benchmarking Co-operation (NEBC) has been set up in 2004 by Scandinavian and Dutch national water associations. In 2006, the first pilot scheme for an international water benchmark was conducted. At the end of 2007, ten countries in Europe had taken part in the International benchmarking 2006. Based on the PIs system of IWA, a three level model of benchmarking has been developed to compare participating facilities at different level. NEBC focus on five key performance areas: water quality, reliability, service quality, sustainability and finance and efficiency (Dane & Schmitz, 2008). NEBC’s benchmarking programme include both water and wastewater sector. In first pilot in 2006, NEBC used the Netherlands benchmarking methodology for drinking water. However participants of NEBC thought it was too extensive and complicated for the first time users. A completely new methodology has been developed for the second pilot scheme based on IWA PIs system. The benchmarking model includes three participating levels: basic, metric and advance (see fig. 2.4). The advantage of this model is that it allows the participation of smaller or less experience facilities at the level that is suitable with their development stage (Dane & Schmitz, 2008). 50 Figure 2.4 NEBC’s benchmarking model (Source: Dane & Schmitz, 2008) NEBC’s benchmarking process consists of seven following phases: (1) preparation phase - new participants are informed all needed information (2) data collection phase - carried out via internet and by participants themselves, the assistance of NEBC coordinators is available; (3) analysis phase - the submitted data are analyzed and reviewed by NEBC coordinators; (4) reporting phase - report containing the most important PIs is provided to identify the own facilities’ performance as well as the gap for different performance areas; (5) best practice phase - the results are discussed, the best practices are identified and the action plans are developed; (6) evaluation phase – an evaluation is conducted by participants and coordinators to identify areas for improvement; (7) closing down phase - the end of a benchmarking process and the beginning of a new cycle (Dane & Schmitz, 2008). NEBC’s second international benchmarking pilot scheme was completed in April 2008, got positive results and feedback from participants and NEBC intend to proceed with the international benchmarking activities (Dane & Schmitz, 2008). 51 2.2.4 Benchmarking for Wastewater Services in Germany In 1996-1997 benchmarking method in wastewater services was first time adopted in Germany. As in many other countries, benchmarking in Germany is based on two prerequisites which contribute to the success: the voluntary participation and the confidential handling of information (Koelbl, 2009). In 2005, six German associations in water industry, namely ATT (Association of Drinking Water from Reservoirs), BDEW (Federal Association of the German Gas and Water Industries), DBVW (German Alliance of Water Management Associations), DVGW (German Technical and Scientific Association for Gas and Water), DWA (German Association for Water, Wastewater and Waste) and VKU (Association of local Utilities) established an agreement on benchmarking in the water sector. In a common statement they comprise how to do benchmarking, objectives of benchmarking, how to deal with benchmarking data and how to report the results publicly. Final reports of benchmarking project have been published as required but these first editions contain mainly statistical data. A guideline for benchmarking in water and wastewater enterprises to support small and middle size plants have also been published by DWA &DVGW. Another public paper is a sample of key performance indicators which is to ensure that the basis of benchmarking in Germany become compatible with each other (Report of EWA&DWA workshop, 2009) There are more than 27 benchmarking projects being currently carried out in Germany. “In all these benchmarking activities the aspects of supply safety, quality, customer service, sustainability and efficiency are considered” (Koelbl, 2009). “In several federal states of Germany benchmarking projects had already been finished in the first cycle and the second evaluation has started. Final reports are available in Bavaria, Baden-Württemberg, Rhineland- Palatinate, North Rhine-Westphalia, Lower Saxony and Mecklenburg-Western Pomerania. In Hessen, Thuringia, Schleswig-Holstein, Bremen, Hamburg and Berlin benchmarking activities are still in progress” (Report of EWA&DWA workshop, 2009) “Similar to Austria the collection of data is carried out with the help of an online-tool and also quality testing is organized centrally. This way of proceeding reduces the efforts for the participants and facilitates the attendance to benchmarking projects” (Report of EWA&DWA workshop, 2009). 52 2.3 Process Benchmarking in Wastewater Sector 2.3.1 What is Process Benchmarking? Though there are many process benchmarking projects in different countries around the world, a worldwide acceptation of definition and steps of this type of benchmarking has not been defined (Koelbl, 2009). Based on many process benchmarking studies, Joerg Koelbl has described process benchmarking as “a management methodology to compare and to optimize the performance in process operation. The basis of such a performance comparison is a well defined and clear process structure with a division of a process into sub processes and single tasks. Process performance indicators should be calculated for the overall process as well as for several sub processes and tasks to enable a comparison on a quantitative basis. In addition to the calculation of process performance indicators it is useful to describe the process operation in a written form. Beside economic aspects, the quality of process operation also has to be analyzed. A central part in process benchmarking is the exchange of experiences, preferably in workshops. After cause analyses and implementation of measures the success in optimization is verified within a new performance comparison” (Koelbl, 2009). 2.3.2 The Objectives of Process Benchmarking Process benchmarking focus on detail optimization potentials therefore it is required to gain a basis of process operation. To achieve this aim, process benchmarking should answer these following questions: - How are the overall process and sub-processes operated? - How much do the main process and sub-processes cost? - What is the working time of the mai