HomeMy WebLinkAboutIR 9611 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9611
To the Mayor and Members of the City Council December 17, 2013
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SUBJECT: IMPLEMENTATION OF WATER UTILITY TASK FORCE
rF RECOMMENDATIONS
On October 22, 2013, Bob Pence, Chair of the Water Utility Task Force presented the final report
of the Task Force, which was charged by the City Council with exploring public private
partnership (P3) opportunities for utility operations. In addition to a determination about the
viability of P3 options, the report included four recommendations designed to assist the Utility with
its continuous improvement efforts. The Task Force recommendations were accepted by the City
Council with the adoption of Resolution No. 4258-11-2013 on November 12, 2013. The purpose
of this informal report is to provide the City Council with the Water Department's approach to
implementing those recommendations.
Recommendation 1: Explore the new revenue stream suggestions submitted
The Request for Information (RFI) process solicited responses to four potential P3 Models,
including submission of new revenue opportunities. One submittal was received with two
opportunities. The Task Force noted that these submissions, which included expanded energy
improvements at the Village Creek Water Reclamation Facility and the implementation of
automated metering infrastructure (AM I), warranted further consideration.
Energy Enhancements —Village Creek has been practicing energy recovery in wastewater
since the 1980's and recent improvements in 2010, under the Energy Savings Performance
Contracts (ESPC) with Johnson Controls (M&Cs C-24070, C-24360 and C-24406), further
reduced Village Creek's energy demand and improved energy efficiency.
As part of those contracts, several process improvements and building systems upgrades were
implemented. Completion of the $35M project occurred in July 2013. Payback is expected to be
less than 12.5 years using guaranteed savings to pay off the project. As a result of these
improvements, the Village Creek Water Reclamation Facility is generating more than 70% of the
energy required to operate the plant.
The submission received through the Strategic Assessment/P3 process proposed expansion of
the recently implemented improvements. This would include expanding and improving the high
strength waste codigestion system, improvements to the gas system to allow operation of the
second turbine and exporting excess electricity generated on site. The submittal is consistent with
Village Creek's goal to be a Net Zero plant. The Task Force recommended following up on this
project, and the Water Department is in the process of working on this phase.
Automated Metering Infrastructure — The Utility has been exploring options for AM I systems,
which provide for "smart meters" capable of electronically transmitting data from the meter.
Technological advances in metering can provide numerous benefits to the utility and its
customers, including the ability to remotely read meters and identify usage patterns that could
help customers identify leaks and other causes of high bills. It also allows staff to view data daily,
improving efficiency and augmenting conservation efforts by detecting watering violations and
leaks.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9611
To the Mayor and Members of the City Council December 17, 2013
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SUBJECT: IMPLEMENTATION OF WATER UTILITY TASK FORCE
rF RECOMMENDATIONS
In 2012, the City Council adopted M&C C-25775 authorizing an agreement with Westin
Engineering to conduct an AMI feasibility assessment. The assessment recommended that Fort
Worth move forward with AMI through a 5-year phased implementation with a projected 7-year
return on investment. AMI requires a substantial upfront capital investment for a system our size,
so it would be very costly to implement changes across the city over a shorter period.
The submission received through the P3 process proposed implementation of AMI through a
performance contract. This would allow for third-party financing of the capital investment repaid
through proposed operational savings derived from reductions in real and apparent water loss
and enhanced revenue collection derived from improved billing accuracy. It also provides for a
transfer of risk to the vendor.
Although the assertions outlined in the submittal are based on the firm's experience with a
smaller Texas utility and are not based on Fort Worth data, staff believes the performance
contract concept might bring additional value to the AMI project. Consequently, staff will initiate
preliminary discussions with the vendor to further flesh out the concept. Concurrently, staff will
identify alternate financing options. Based on the results of those discussions, staff will make a
determination on the most cost effective option and proceed to product selection. It is anticipated
that an RFP for project management and system installation will be released once the initial work
is complete.
Recommendation 2: Expand the Water Department's existing continuous improvement
program and coordinate with the City's Lean Six Sigma Program
A key recommendation from the 2010 Water Department performance assessment was for the
utility to create a formal performance management system driven by enterprise business
strategies. It was also recommended that the utility use the newly created Effective Utility
Management (EUM) model and its 10 Attributes of Effective Utilities as a guideline. The EUM
model was developed in a collaboration of the six major associations representing the U.S. water
and wastewater sector and the Environmental Protection Agency. As part of the 2013 Strategic
Assessment (P3 Evaluation) a Balanced Scorecard was developed to provide a dashboard view
of the performance from four distinct perspectives: Financial, Internal Business, Innovation &
Learning and the Customer's perspective. This system, supported by the EUM, provides utility
management with quarterly performance data to evaluate trends in performance. The Task Force
recommended expansion of the existing program and the Water Department is working with other
utilities around Texas to compare performance metrics and expand the existing Balanced
Scorecard.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9611
To the Mayor and Members of the City Council December 17, 2013
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SUBJECT: IMPLEMENTATION OF WATER UTILITY TASK FORCE
rF RECOMMENDATIONS
The Task Force also recommended that the utility coordinate continuous improvement with the
Lean Six Sigma program. While the EUM attributes focus on outcomes water-sector utilities
should strive to achieve, staff understands that there is a need to demonstrate how other well-
accepted tools can help the utility improve efficiencies, reduce waste in operations, and promote
utility sustainability. The EPA recently developed a resource guide to "Effective Utility
Management and Lean" based on input and examples from several utilities involved in both EUM
and Lean Six Sigma principals. In simple terms, the EUM attributes express what the utility
should seek to achieve and Lean Six Sigma tools outline how to work towards those attributes, or
outcomes. This provides the framework of the path forward for the Fort Worth Water Department.
Department leaders and trained Six Sigma staff will be working with the City's Performance Office
to analyze metrics and identify and prioritize projects that provide greatest impact on optimized
operations.
Some examples of new and expanded continuous improvement projects include:
1. Implemented Reliability Centered Maintenance (RCM) program in Water
Production. Trained staff performed in-house evaluations and an audit of preventive
maintenance work orders, eliminating and consolidating in order to gain efficiencies. An
external auditor was brought in to review the Computerized Maintenance Management
System (CMMS) and its use. The audit resulted in modified, upgraded and standardized
CMMS usage. Since these improvements, the amount of planned work performed by the
division has risen from about 30% in 2008 to approximately 75% in 2013. These
efficiencies have allowed staff to perform more in-house project work, which results in
substantial capital cost savings to the Department.
2. Evaluation and implementation of Holly Water Treatment Plant shutdown during off peak
periods to save energy and chemical costs. The recent freezing weather provided an
excellent test of this shutdown and as a result, the department is saving operational cost
and reducing main breaks in the distribution system.
3. The Water Customer Relations Multi-Channel Contact Center is collaborating with
Customer Assessment Consultant with The Ascent Group, on a program to identify ways
to better capture and enhance the customer experience for Fort Worth Water utility
customers. The program will implement processes and measurements for First Contact
Resolution (FCR), enhance existing customer contact quality measurements to better
capture the customer experience, and to improve underlying business processes to
promote ease of doing business.
4. Field Operations and Meter Services staffs are piloting the use of drive cams to improve
driver behavior and reduce accident costs.
5. Lean Six Sigma techniques will be used to improve the efficiency of the Field Operations
water main break investigation and repair process, with a focus on integrating water and
sewer crew resources where feasible.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9611
To the Mayor and Members of the City Council December 17, 2013
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SUBJECT: IMPLEMENTATION OF WATER UTILITY TASK FORCE
rF RECOMMENDATIONS
Recommendation 3: Consider opportunities for the Water Department to partner with other
departments to optimize interdepartmental business processes
The Task Force spent time reviewing utility operations and performance metrics and it identified
an opportunity to improve efficiency in areas where there is overlap in process between City
departments. Addressing interdepartmental business processes will extend the utility's
continuous improvement processes across departmental boundaries. The following process
optimization efforts resulted from the Strategic Assessment:
o Improve coordination with TPW on maintenance and bond projects for arterials, neighborhood
streets, and priority water and sewer replacements in the ROW. Additional discussions and
coordination efforts are beginning, not only in the planning sections but also in design and
inspection. The goals are to improve information coordination, better manage personnel
resources, reduce overall costs, and complete projects in a timelier manner.
• Use the 2013 Safety Program Review to partner with the Human Resources department in
attaining improvements in the City's safety/workers compensation program, thereby reducing
cost.
• Initiate conversations with the Equipment Services Department to improve fleet availability
and related productivity through scheduling preventative maintenance activities after regular
working hours.
Recommendation 4: Continue internal departmental evaluation of strategic outsourcing
opportunities for specific services.
The Utility has a long history of outsourcing services that can be performed more efficiently by the
private sector. Notable examples include operations of the biosolids program, residential meter
reading, operations of the energy generation facility, large sewer main condition assessment and
cleaning, and bill production and mailing services. Standard operations are regularly reviewed for
outsourcing opportunities.
The RFI released through the P3 process specifically solicited strategic outsourcing opportunities.
Although 97 distinct utility functions were identified in the RFI, no submittals were received. The
Task Force recognized the importance of using the private sector where appropriate and
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9611
To the Mayor and Members of the City Council December 17, 2013
`�` Page 5 of 5
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SUBJECT: IMPLEMENTATION OF WATER UTILITY TASK FORCE
rF RECOMMENDATIONS
encouraged staff to proactively seek new outsourcing opportunities. In 2014, staff will assess the
feasibility of outsourcing the following:
• Street repair work;
• Field services for delinquency management;
• Large meter testing and change out contracting; and
• Large main leak detection
The Water Department is committed to the process of optimizing operations through a culture of
continuous improvement. The recommendations of the Task Force will provide a focus for the
Department's efforts moving forward. Should you have any additional questions, please contact
Frank Crumb, Water Director at 817-392-8207.
Tom Higgins
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS