7.0 Review of Management Systems

Transcription

1 7.0 Review of Management Systems 7.1 INTRODUCTION This section is intended to review management systems which will allow the Joint Board of the LHPWSS to have the staff and planning mechanisms in place to manage the day to day operations of the water supply system and to initiate major capital upgrades in a timely and cost effective manner. Subsection 7.2 includes a review of administration staff levels in light of the present and future realities and recommendations on appropriate staffing levels. Subsection 7.3 is intended to provide the Joint Board with a mechanism to identifying the trigger points for the capital improvements identified in Section 5,0 of the report. Subsection 7.4 provides suggestions with regard to additional management tools. 7.2 REVIEW OF JOINT BOARD ADMINISTRATIVE STRUCTURE Introduction As described in Section 1 of this report, under the Transfer Order for the Lake Huron Primary Water Supply System,4ethe City of London is designated as the Administering Municipality for the system. The City of London s General Manager of Environmental Services & City Engineer is designated as the CAO of the LHPWSS. The London City Engineer has the same position with respect to the EAPWSS as the City of London is designated as the Administering Municipality for this system. 4e The administrative staff below the CAO administers both primary water supply systems, which promotes a certain degree of efficiency by minimizing duplication of effort, which would arise from two separate administrative staffs. Therefore, the comments and discussions in this section regarding the Joint Board Administrative staff apply to the combined administration for both the LHPWSS and the EAPWSS. Stante~ The CAO has the responsibility to both Joint Boards for the overall performance of both systems. The Joint Board Administration has been integrated into the City of London s Environmental Services Department as the Regional Water Supply Division within the under the Director, Water, Environment and Customer Relations in the Environmental and Engineering Services. 3 The day to day operation of the LHPWSS is under the direction of the Manager of Regional Water Supply (previously designated the Manager of Operations and Compliance). We have identified three levels to the overall administrative structure, these are as follows: The level of governance made up of the member municipalities with voting powers based upon those bestowed under the respective Transfer Order; 46. October

2 The level of senior administration which is made up of the CAO who has the responsibility to both Joint Boards for the overall performance of both systems as well as any other senior staff as is deemed necessary by the City of London to provide for sufficient oversight as the administering municipality; and The level of administration, which oversees the day-to-day operations of the system and includes maintenance of regulatory compliance, project planning and contract administration to work provided by outside agencies to the Joint Board. The scope of this study does not involve examining the governance of either primary system nor does it concern itself with the level of senior administration. This study is to focus on the level of administration, which will be referred to as the Joint Board Administration. The organization of the LHPWSS is shown in Figure 7-1. Figure 7-1 Present LHPWSS Organizational Structure LEVEL OF GOVERNANCE Elgin Area Joint Water Board Lake Huron Joint Water Board LEVEL OF SENIOR ADMINISTRATION CAO of the Regional Water Supplies Board Director, Water Environment and Customer Relations i (-C-i~- ~f London) LEVEL OF ADMINISTRATION Manager of Regional Water Supply (Formerly Manager of Operations and Compliance) Stantec r Contract Operator American Water Services Canada Corp (10.5 FTE staff) Technologist (assigned from City of London Staff) Note: Our Study is not concerned with organization above the Manager of Regional Water Supply Administration Services (purchased from the City of London as required) October

3 7.2.2 Review of Major Responsibilities for the Joint Board Administration There are three constellations of responsibilities that the Joint Board Administration must undertake on behalf of the member municipalities of the LHPWSS. These are as follows: Issues related to the delivery of water to the member municipality s secondary water supply or distribution systems; Issues related to the regulatory compliance with the Safe Drinking Water Act (SDWA), the Sustainable Water and Sewage Systems Act (SWSSA), and other related legislation as discussed in Section 4 of this report; and Issues related to the planning and implementation of capital upgrade projects identified in Section 5 of this report or other planned projects. The Joint Board must ensure that the LHPWSS is operated so as to provide sufficient potable water to its customers at all times. To accomplish this the LHPWSS has a contract with a private company, American Water Services Canada Corp (AWSCC) to act as the operator for the system. The Joint Board Administration is responsible for ensuring that AWSCC operates and maintains the primary system in accordance with the contract terms and with due regard for any changes in the operating or regulatory environment that may occur since the contract was executed. Table 7.1 shows the basic guiding principles of the administration and operation of the LHPWSS as adopted by the Joint Board. Stantec Table Basic Guiding Principles of the Administration and Operation of the LHPWSS Quality of Service: The Operator must meet or exceed the level of water quality currently delivered to our customers as stipulated in the Contract, which surpasses the Ontario Drinking Water Standards; Operating Flexibilityllnnovation, Efficiency: The Joint Boards wish to encourage performance improvement throughout the Joint Boards System. Changes that have major implications on the Joint Boards System will require the approval of the Joint Board. Where financial gains are made from improved efficiency, it is anticipated that such gains will be shared between the Joint Boards and the Operator; Asset Protection and Maintenance: The Joint Boards wish to ensure that the System at the end of the Contract is returned in a condition as mutually agreed to in the contract which, in any event, will be in a condition better than their pre-contract condition; Continuity of Service: Service shall be maintained throughout the term of the Contract and through any transition period to a new Operator; Environmental Impact: Environmental impact will be minimized and, at the very least, the existing performance will be maintained; Municipal Control: The Joint Boards must maintain overall control over the assets, capital construction, system growth, and the long-term development of the system; Value for Service: The Operator must provide the best service for the price offered, as well as provide cost control mechanisms; Capital Projects: The Joint Boards are responsible for developing, approving, funding and controlling October

4 Table Basic Guiding Principles of the Administration and Operation of the LHPWSS the implementation of all capital projects. The input of the Operator on capital projects will be sought. The Joint Boards are particularly interested in receiving innovative suggestions from the Operator that will enhance the Joint Boards System performance; and Appropriate Allocation of Risk: Throughout the term of the Contract, an appropriate balance of risk and benefit will be established between the Joint Boards and the Operator. Section 4 of this report details the pending changes to the regulation of drinking water systems in Ontario which will greatly increase the demand on the LHPWSS Joint Board Administration in terms of the undertaking and maintenance of a Municipal Drinking Water Licence as required under the SDWA. The Joint Board Administration will have to at the very least provide a greater deal of financial data to member municipalities based upon the requirements of the SWSSA. Both of these acts will require periodic reporting of information in detail that goes beyond the current operational and financial reporting that is required. This section also details other regulatory changes in the area of environmental projection, which may impact the LHPWSS Section 5 of this report details the probable capital improvements required over the study period. The intention as will be described in Subsection 7.3 of this report, is to provide the Joint Board with a mechanism for the determination of trigger points for specific projects and to effectively manage the delivery of the planning, engineering and construction services that will be required to realize these projects. Given the potential investment of $ 92.6 million identified as required within the next ten to fifteen year period, it would be prudent to ensure that the Joint Board Administration has sufficient staffing to manage the implementation of these projects Proposed Joint Board Administration Organization Based upon the requirements of the Joint Board Administration to manage the ongoing operations, deal with current and imminent regulatory requirements and to manage the projected capital program, we have concluded that three project coordinators/project managers are required to work below the Manager of Regional Water Supply. These positions would have the following responsibilities: Stantec Planning and Service Delivery Coordinator who would be responsible for the day to day administration of the service agreements with operating agencies, coordination with member municipalities and secondary system operators, assisting with member conservation programs, monitoring issues related to the implementation of capital upgrade timings as per the Master Plan schedule and for the delivery of any water system wide programs on behalf of the member municipalities; October

5 Compliance Coordinator who would be responsible to ensure compliance with the Safe Drinking Water Act provisions, managing of any mandated accreditation process, updating the recently completed ISO certification as required for maintaining accreditation, dealing with financial plans and operation plans, and dealing with MOE on enforcement issues; and Technical Support and Projects Coordinator who would be responsible for the upkeep of all required data, drawings and plans for the systems as well as for the staff oversight and project management for any ongoing planning and capital works projects. The proposed organization of the Joint Board Administration is shown in Figure 7-2. This staff structure would service both the LHPWSS and the EAPWSS thereby providing economy for both systems. Figure 7-2 Conceptual Regional Water Supply Administrative Structure Manager of Regional Water Su )ply Administration Services (assigned support staff) Planning and Service Delivery Coordinator Compliance Coordinator Technical Support and Projects Coordinator Contract Operator American Water Services Canada Corp Other Operators for Future System Components as Required Stantec October

6 7.3 MECHANISM FOR DETERMINATION OF TRIGGER POINTS FOR CAPITAL IMPROVEMENTS In Section 5, three primary drivers for new capital projects were described. These are projects to provide additional system capacity to provide for demand growth; projects to enhance the level of security to the water system; and capital projects that are mandated by regulation. The process of undertaking a specific capital upgrade project begins when a "trigger point" requiring action by the Joint Board has been reached. A "trigger point" is defined as when a set of circumstances occur that warrant the commencement of a capital upgrade project. The current trigger point mechanism for the LHPWSS is contained in paragraph 27 of the Transfer Order,~6 which states: "The Joint Board will provide new capacity on an as-required basis sufficiently in advance of growth as to not impede development in any municipality within the Lake Huron Primary Water Supply System Service Area, as described in Schedule D, subject to the provisions of section 1 (i). In any event the Joint Board will initiate the design and construction of works required for System optimization, or capital expansion, when recorded water flow demand on the System reaches eighty-five (85) percent of the System capacity, or as otherwise determined by the Joint Board. a,, a - Italics placed by Stantec for emphasis This trigger mechanism only addresses, capital projects that are growth related and not ones, which arise from security enhancement or from those mandated by regulation. With respect to capital projects for demand growth, the 85% trigger point provides a major contingency for most water supply systems with low or moderate demand growth. As such it is a conservative benchmark. The 85% capacity trigger point established in the Transfer Order 46 is not be a valid means to implement capital improvements for demand growth for the following reasons: From 2006, when the City of London s SE Reservoir comes on line, to the expansion of the Elgin Area Water Treatment Plant, the City of London will be drawing a block of water as per its agreement 2 that is artificially raising the demand growth from the City of London for the LHPWSS; and Stante~: In the remainder of the LHPWSS, there has been lower than anticipated demand growth as outlined in 1994 Master Plan 4 in effect at the time when the Transfer Order was drafted. October

7 The current MOE guideline 4~ states: "Plant performance and hydraulic capacity should be closely related to municipal growth management objectives in order to produce environmentally sound decisions regarding servicing. Municipalities ~ should recognize that plant expansion or upgrades typically require a minimum of 3 to five years to develop, and should therefore plan for their long term development needs accordingly." b - in this case read the LHPWSS Joint Board Therefore, it is recommended that the 85 % trigger point be abandoned as is permitted in the Transfer Order. This can be replaced with a new mechanism that takes into account the block demand portion of the City of London, the moderate growth of the other LHPWSS municipalities and the non-growth related capital projects which are required. The key to discerning when a trigger point has been reached is the capability to monitor the demand trends and adjust the forecast date of when a specific improvement needs to be in service. This analysis will also need to take into account the impacts of the actual operation of terminal storage facilities within the primary system as well as storage facilities within the secondary and local distribution systems which can effect the operation of the primary system at and approaching maximum day conditions. Regardless of the type of capital improvement (growth, security, regulatory), there are four issues to consider with respect to the trigger point to begin the implementation. These are: Stantec The lead time required between when a capital improvement is needed to meet expected demand and the expected time that the optimization, planning, designing, constructing and commissioning will take to complete; The risk of exceeding the existing capacity due to fluctuations in demand during the time that the capital improvement process is being undertaken; The level of risk to the disruption of the water supply that is acceptable for the Joint Board to assume; and The timing to implement a capital improvement to maximize its return on investment through increased revenues due to additional supply of water used by customers. Table 7.2 presents a very simplified analysis using the four-issue approach described in this section. For a thorough analysis of the expected demand, the level of risk in putting off capital works projects and the anticipated Return on Investment, a comprehensive understanding of the LHPWSS is required. October

8 Presently, the Joint Board is required to develop a New Capacity Capital Plan based upon the Master Plan Update, which is to be undertaken every five years as is required by the Transfer Order. It is recommended that the 85 % trigger point be abandoned (as is permitted in the Transfer Order) in favour of a formalized update of the New Capacity Capital Plan on an annual basis. This would permit the flexible implementation of capital projects as the demand projections or other identified needs in current Master Plan may not materialize, may not be as pressing or may be required earlier than had been anticipated. This New Capacity Capital Plan update would be undertaken by the Technical Support and Projects Coordinator (as identified in Section 7.2.3) under the direction of the Manager of the Regional Water Supply. Stante(: October

9 Table Sample of Decision Making Process Problem Statement: Capital Improvement Solution: 2003 Capital Cost Estimate: Capital Cost Components: # Issue 1 Lead time for new transmission main to be brought into service 4 Risk of exceeding existing capacity while project underway Level of risk for the disruption of the water supply without new transmission line Return on Investment Current transmission main only has a capacity of 300 ML/day and is currently the limiting factor of LHPWSS which otherwise has a capacity of 340 ML/day. Twin the remaining portions of the 1200 mm transmission so that it is sized to handle expected demand at current planning hodzon of 2026 and to provide for secudty of supply by being fully twinned. $ 46.6 million $40.5 million construction cost estimate, $ 6.1 million non-construction (project management, optimization, planning and engineering) cost estimate Analysis Three Years are required: Six months for Class EA or other planning and project management requirements; Nine months to undertake detailed design; Three months for C of A approval; and Two calendar years for construction (based upon a multiple contract approach with a maximum of 8 months of construction weather/ year for a total of 16 months =$2.5 million of construction per month) Commissioning to be undertaken before maximum demand period in summer where capacity is reached which is currently Based upon 2003 master plan update, the maximum day demand will be just below 287 ML/day in 2006 (medium growth scenario). The 2006 demand is within 5 % of capacity. A severely hot summer between 2006 and 2010 or high growth may push demand to this capacity. The existing 1200 mm transmission main is 37 years old in the reaches that are not twinned and will be 43 years old by Hydraulic modeling indicates that there may presently be pressure and velocity problems experience in the main. As demand increases toward an expected peak in 2015 and the main ages, the frequency and severity of a transmission main break will increase. Financial analysis based upon the Joint Boards approved methodology considering: Net revenue generated per ML/day for each ML over the number of days that the new transmission main provides for additional capacity between 300 ML and 323 ML. Portion of net revenue generated per M!.Jday for each ML over the number of days that the twinned transmission main provides for additional capacity above 300 ML. 1 - the total net revenue will have to be divided between the cost of the water transmission main and the treatment plant expansion to determine return. Stante~ October

10 7.4 OTHER MANAGEMENT TOOLS In order to assist with the determination of timing for capital improvements and to improve the overall quality of the management of the LHPWSS, data collection, collation and analysis are important. One method available to assist in this process is to have a dedicated resource library to manage information. The LHPWSS should consider the implementation of an electronic reference library that would contain the following elements: Design and construction drawings; Reports (such as this master plan, annual reports); Historical data required to assist in the determination of trigger points and for trending analysis; Historical data required for regulatory compliance (such as the fifteen year retention period required for chemical testing results in O.Reg. 170/03); Documentation of all physical, hardware and software changes to the system made by the operations contractor including the rationale for the changes; and Copies of up to date software applications for the SCADA system, which should be archived every three months, or at a frequency to keep track upgrading/modification activity by Joint Board Administration staff, contractors or the contract operator. This library could be expanded to include up to date copies of legislation and regulations and up to date operational procedures. A library complete with periodic updating procedures (usually every three months) in place will ensure that the Joint Board Administration can assist in the following areas: Maintain proprietary information system separate from the LHPWSS contracted operator; Monitor the terms and conditions of the operations agreement; Provide a basis for the information collation required in the Safe Drinking Water Act s yet to be determined licencing and accreditation process; Provide a basis for the information collation required in the Sustainable Water and Sewage Systems Act s yet to be determined reporting and cost recovery planning requirements; Assist in the effort to maintain ISO compliance by providing a structure to periodically update legislation; Provide a structure to retrieve information in a timely fashion to ensure regulatory due-diligence and compliance; and To provide up to date data for the LHPWSS ongoing efforts in Risk Management. October

11 It is estimated that this electronic library would cost approximately $100,000 to set up in terms of development and workshop costs, hardware purchasing, scanning of priority documents, programming, software licensing and training. This library would at first contain high priority information and would evolve over time to serve as the key information source for Joint Board Administration staff as well as when authorized for consultants, contractors and the contract operator. The electronic library would be maintained both in the Joint Board Administration office and in the Joint Board Administration s office space at the Lake Huron Water Treatment Plant. It would be anticipated that the Technical Support and Projects Coordinator would act as the librarian for this system and be the primary person to maintain and update the library. The Compliance Coordinator would act as the alternate librarian. Staff time to update and maintain the library is expected to be in the order of 250 to 500 hours per year depending upon the level of use made of it as well as the data input required due to the level of maintenance and capital works activity. Stante~ October