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HomeMy WebLinkAboutIR 7743 INFORMAL REPORT TO CITY COUNCIL MEMBERS No7743 �o���.0 Tt*,o To the Mayor and Members of the City Council July 27 , 1993 PRIVATIZING METER READING Subject: Backirround The meter reading section of the Water Department is responsible for reading approximately 177 ,000 water meters monthly. This function enables the City to bill each customer based on actual water consumption. An average of 8, 100 meters is read each day. The meter reading section is comprised of 18 meter reader positions, an Assistant Meter Reader Supervisor, an Administrative Aide, a Clerk 11 and a Meter Reading & Investigations Supervisor for a total section budget of $654 , 516. Each meter reader reads approximately 450 meters per day, using automated hand- held devices .. There are 22 cycles each month so that a portion of the City' s customers is billed each day, to ensure consistent cash flow. Concerns A unique set of staffing and operational concerns have hampered the meter reading function- in recent years . Since 1990-91 , the average turnover rate for the meter reading section has been 33%. An internal audit report recommended budgeting an additional two meter reading positions to cover the high turnover rate. In order to maintain adequate coverage, borrowing staff from other sections has been required. In FY 1993 , 46 . 8% of all meter reads were completed by employees other than meter readers . Increased errors requires that 18. 5% of all meters read be re-read and/or verified prior to billing. There has been an increase in work related injuries . Over the past three years, nine employees have reported work related injuries which have accounted for an average of 85 lost work days per injured employee . Difficulty in filling vacancies has a I productivity. Currently, to fill a vacant posi -i IRI�q RECORD minimum of 75 work days is needed . CITY SECKTARY FT. WORTH, TEL.J -ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No.7743 �oi 4oaryv To the Mayor and Members of the City Council July 27 , 1993 Page 2 of 4 Vx PRIVATIZING METER READING Subject: Proposal In May 1992 bids for privatizing the meter reading services were solicited. At that time unreliable meter reading equipment dictated that the contractor supply the reading devices as well as the monthly meter reading service. One bid was received, and that cost was $ . 305 per meter read, plus $72,000 per year for meter reading devices . The total contract price was $719, 820 (based on 177 ,000 readings per month) . This cost was only slightly higher than in-house costs, however for a variety of reasons, it was recommended that other options be considered at that time and a decision was made to install new reading equipment by the City. In February 1993, this new reading system was installed. The new system eliminated the equipment problems, however , the feasibility of privatizing continued to be explored due to the inability to attract and retain qualified employees . These excessive vacancies and inexperienced meter 001Lreading personnel have resulted in operational problems and inefficiencies which have added an expense estimated at approximately $410 ,000 annually. to the "meter reading cost " . (Attached to this IR is a fact sheet outlining in detail these issues ) . A Request For Bids for contract meter reading was again released in May 1993 . Three bids were received and two companies declined to bid. The bids received were as follows : Bid Amount Annual Amount/Per Meter Reading Cost Schlumberzer. Hocutt Bermex Inc . Year 1 $688 . 800/$ . 4100 $549,360/t . 3270 $495 , 600/$ 995 Year 2 t688, 800/t .4100 $561 ,960/t .3345 $5112 . 400/t IFICIAL RECORD Year 3 t722,400/$ . 4300 t574 .560/$ . 3'420 $546 .000/$ 3 Year 4 $722 ,400/$ .4300 t587 . 160/$ . 3495 $546 , 000//$ 36� SECRITARY Year 5 No bid $587 . 160/t . 3495 $5461000/$ IMI" WORTH, TEX 1 4 - These bids were based on a MiDiffiUM 01' 140 , 000 readings per month . The low, bidder . Bermex. was low for all five years . I ri order to completely contract meter reading services , the low bidder ' s cost of $ . 295 per meter would total $628 ,, 288 for reading 177 ,000 active and inactive accounts , as compared to $ . 3208 per meter or $681 ,460 to perform the function in- house. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No,7743 foer To the Mayor and Members of the City Council July 27 , 1993 Page 3 of 4 r�xry. Subject: PRIVATIZING METER READING fa 7 3 Contracting meter reading was contemplated in Customer Service ' s 1993-94 budget request and acceptance of the bid will result in the deletion of 20 positions and their associated costs . ( 18 are meter readers , one Clerk 11 and the Meter Reading & Investigations Supervisor ) All affected employees have been notified and the contractor is required to interview these employees . If this proposal is approved, every effort will be made to place employees in other positions within the City. The employees have been informed of the request for bids and of the staff recommendation. (Actual costs that would be deleted from the budget total $527 ,478 . Costs that would remain whether the service was contracted or maintained in-house include retention of the Assistant Meter Reader Supervisor and art Administrative Aide to administer the contract and perform uploading and downloading of the reading equipment , ISS charges and various indirect costs , such as workman ' s compensation and the administrative overhead charge. ) Adding these on-going costs to the contractor ' s bid results in a higher first and second year cost to contract the services . However , over time, the City gains the following: $50, 000 per year can be saved from a reduction in workman ' s compensation claims . $102 ,496 reduction in costs that directly support our ability to meet an established read schedule monthly. i . e . overtime, decrease in re-reads , etc . The ability to increase field collections or past due accounts by approximately 05 ,000 monibly . In reviewing the five year bids , the City would realize a redlict I oii IF, meter reading costs with a contract in the second year ai'to b�' the third year would have expended less money on the service than if it had becii provided in-house. OFFICIAL. RE CTOJ" CITY SECRETARY X F T. WoRlov . ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7743 To the Mayor and Members of the City Council July 27 , 1993 Page 4 of 4 Subject: PRIVATIZING METER READING Bermex ' s bid is consistent with the objectives established for privatizing. The contract calls for penalties to be paid by the contractor for misreads, thus encouraging accuracy and quality of meter reading. This item will be on the Pre-Council agenda and a M&C will be presented to the Ci y uncil for consideration on August 3 . 1993 . BOB ELL ERR: B o, CITY MANAGER LOFFICIAL RECORD ly CITY SECRETARY RTV TEX. IvIll 0 FT. WOnTu, I -ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS 00111 FACT SHEET HIDDEN COSTS METER READING 1. Extremely high turnover rate as evidenced by the years of service listed below Eighteen approved positions -- one vacancy 4+ Yrs 3+ Yrs 2+ Yrs 1+ Yr Less Than 1 Yr 1 2 2 3 9 Eight of the nine who have been here less than one year have actually been here less than four months. 2. High turnover requires that Meter Reader 11 's (crew leaders) must spend more time training new employees, thereby reducing the Meter Reader Il 's productivity, i .e. reading less than the average of 450 meters daily. 3. New readers are slower in reading routes which requires overtime to finish a route and often means that meter reading office staff must work overtime in order to download the handheld units at an annual cost of $2,432 . 4. Inexperienced readers means more errors which requires additional time for re-reads and overtime for bookkeeping and billing staff to correct billing errors, at an annual cost of $5,000. 5. Shortage of meter readers dictates that water service representatives must read meters in order to meet billing schedules. This affects the division's ability to collect delinquent accounts which is one of the primary functions of service representatives. Uncollected water revenue represents a minimum of $400,000 annually. 6. The department 's credibility with citizens is affected because of inability to perform investigations and m tel- exchanges in a timely manner which are other tasks of nr'rw ORWAL REC70RD service representatives. CRE � CITY SECRETARY FT. WORTH, TLX. Page 2 7. Morale - not only meter readers, but all supporting personnel 's productivity is affected due to the additional work load necessitated by the constant shortage of meter reading staff. In addition, work related injuries have increased in the sections which must support meter reading. LOf FICIAL RECO 0 CITY SECRETARY FT. WORTH TEJX.