MANUSCRIPT THE DETROIT WATER AND SEWERAGE DEPARTMENT S PERFORMANCE AND DASHBOARD SYSTEM (PADS): STRATEGIES, ACTIONS, AND MEASURES FOR OPTIMAL RESULTS

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1 ABSTRACT MANUSCRIPT THE DETROIT WATER AND SEWERAGE DEPARTMENT S PERFORMANCE AND DASHBOARD SYSTEM (PADS): STRATEGIES, ACTIONS, AND MEASURES FOR OPTIMAL RESULTS Authors: Ryan W. Nagel, Senior Consultant, Black & Veatch Corporation Victor M. Mercado, Director, Detroit Water and Sewerage Department Gary Fujita, Deputy Director, Detroit Water and Sewerage Department Nate T. Lindstrom, Consultant, Black & Veatch Corporation Primary Contact: Ryan W. Nagel Senior Consultant Black & Veatch Enterprise Management Solutions 101 North Wacker Drive, Suite 1100 Chicago, IL Today s heavily regulated and financially limited utility environment necessitates improvement through a structured program of continual Performance Management. This presentation examines the implementation of a Performance Management System and a structured program of continuous improvement for one of the country s largest municipal water and wastewater utilities, the Detroit Water and Sewerage Department (DWSD). In order for DWSD to continue to strive toward meeting its stated Mission to exceed its customers expectations through the innovative treatment and transmission of water and wastewater, and the provision of services that promote healthy communities and economic growth in a cost efficient manner in today s operating environment, it must continually improve through a controlled program of performance management. Essential to the successful implementation and execution of a robust performance management program is the ability to easily monitor and hold accountable appropriate managers and supervisors for Key Performance Indicators (KPIs). To this end, the Department has developed such indicators. Appropriate responsible managers and supervisors have also been identified for each indicator. However, what was needed was a structure that groups and organizes the indicators in such a manner that management can quickly identify and isolate areas that are experiencing difficulties or that require additional resources. If an area of an organization is not performing as anticipated or expected, it is unlikely that only one performance indicator is being impacted. 1

2 Structuring of the KPIs in a visual format can quickly provide organizational management with a wide-range of information needed to make decisions and adjust activities to positively impact performance. A properly structured performance monitoring program can also provide support needed to recognize outstanding performance of teams, groups, or divisions. As such, DWSD has worked with Black & Veatch to develop the Performance and Dashboard System (PaDS) to leverage best business practices and focus its combined water and wastewater experience on performance management issues and challenges within the Department without impacting the overall quality of service. In addition to strategic benefits such as enabling DWSD to focus on results, enhancing communication at all levels in the organization, and providing the Big Picture perspective, PaDS has enabled DWSD to realize operational benefits, including allowing its management to make informed decisions in a timely manner, helping to prioritize actions based on reliable performance metrics, and keeping the focus on performance-related issues through visual representation of cause-effect relationships. This paper will discuss these strategic and operational benefits, as well as positive quantifiable results achieved since PaDS was fully implemented at DWSD. KEYWORDS Detroit Water and Sewerage Department, Performance Management, Dashboard, Key Performance Indicators, Metrics INTRODUCTION Performance Management is a practical management technique that supports and sustains effective performance across all levels of an organization to ensure that all components are working together in an optimum fashion to meet desired results. The Detroit Water and Sewerage Department ( DWSD ) began its path toward the creation of an effective Performance Management culture in 2002, with the creation of several performance measures designed to increase the operational efficiency of the Department and to enhance the performance cultural awareness of all organizational staff members. In 2003, the City of Detroit introduced its CitiTrak program to monitor and manage City Agency performance at the highest levels. Subsequently, each City Department was responsible for reporting specific performance measures to the Mayor s Office each month, relative to that Department s role and responsibility within the City. By mid-2004, DWSD was reporting over 800 data points to the City of Detroit Mayor s Office each month. These data included Key Performance Indicators (KPIs) similar to the KPIs required of other City Departments, along with hundreds of other data points distinctly specific to DWSD. Data were compiled into a book, consisting of spreadsheet tables and charts, which was sent manually to the Mayor s Office. By reporting KPIs in tables and charts, an extensive array of data was available, but very little actionable information was readily apparent. For example, the KPI definitions were not easily accessible; defined ownership of KPIs and associated commentary and action plans were nonexistent. This made it difficult for executive 2

3 leadership to quickly identify critical problem areas within the organization. Even if critical problems areas were able to be identified, no explanation or context around the issue or possible solutions were presented. As shown in Figure 1, the quantity of information provided to the Mayor s Office each month was extensive, but the ability to quickly discern meaningful information necessary to make business decisions quickly was difficult. Figure 1 DWSD CitiTrak KPI Reporting Prior to Dashboard Implementation EXAMPLE DATA DWSD began to realize the need for a more robust Performance Management System. Black & Veatch was engaged to aid the Department with its implementation of the DWSD Performance and Dashboard System (PaDS). KEY PERFORMANCE MANAGEMENT COMPONENTS In September 2004, DWSD and Black & Veatch began an 18-month PaDS implementation and Performance Management initiative. The following activities formed the building blocks of this initiative (Nagel, et al, 2005): Process and Quality Control Manager. To maintain a focus on performance improvements within a structured Performance Management system, it is imperative that utilities seeking a new Performance Management culture appoint a Process and Quality Control Manager ( PQCM ) reporting directly to the Director of the Utility. Given significant authority and accountability for improvement, the PQCM position quickly takes a visible and important role in the leadership of the organization. DWSD filled its PQCM position from within. This individual was integral in working with the Black & Veatch project staff throughout the implementation to ensure proper transfer of system knowledge. 3

4 Strategy Alignment. A Performance Management program cannot be undertaken without sound business strategies against which to measure. The majority of utilities have a comprehensive strategic plan driven by regional, regulatory, legal, operational, and financial issues; all of which can be incorporated into the Program. At DWSD, the alignment of their existing KPIs, as well as the alignment of new KPIs and other performance measures created during the engagement timeframe was accomplished through detailed interviews and workshops with DWSD management and staff. Meaningful Key Performance Indicator (KPI) Development. At the heart of any Performance Management Program is the development of measurable criteria that truly indicate the present operating conditions of the utility and offer insight into possible corrective action. Measures can be driven from the strategic plan and established against a variety of target values representing the desired state of the utility. After two years of developing KPIs and performance data, DWSD had a volume of performance metric information already created. However, some of the KPIs required qualification to ensure that they were indeed measurable and controllable. Driving Accountability. In order for the desired performance culture to prosper, a utility can distribute responsibility for metrics and their corresponding measurements through appropriate delegation. Accountability is not about punishment, but rather ensuring the timely sharing of information from the most knowledgeable individuals in the organization to keep management aware of issues impacting performance. Each performance metric within DWSD s PaDS was assigned a measure owner for which all measure responsibility was given. Capturing the Data. Initially, PaDS was deployed using manual data entry. By starting with a manual data entry technique, measure owners were able to identify data problems that may have existed. Once measure owners were comfortable with the data being entered into the PaDS, automation techniques could be evaluated and implemented. Reporting and Analysis. In addition to maintaining raw data values and the comparative analysis to performance targets, the PaDS can enable users throughout the utility to enter commentaries and issue resolution action plans. The system allows these plans to be viewed across the utility and can be provided in electronic form to interested external stakeholders (e.g., the Board of Water Commissioners, the public, etc.). The City of Detroit Mayor s Office now views DWSD s KPIs via a web link to DWSD s PaDS. Managing a Performance Culture Organization. Most important in the mission of the Department is to instill a culture of continued performance improvement. The PaDS is a key component in fostering a performance management culture using existing DWSD performance metrics by encouraging accountability in the delivery of superior service. VIEWS PERFORMANCE MANAGEMENT SOFTWARE DWSD chose performancesoft s performance management software, Views, as the tool for implementing its PaDS. Views is a technology enabler that streamlines the reporting and 4

5 presentation effort associated with a Scorecarding approach to strategic management. The software provides visual and actionable information in a management-friendly interface, allowing areas of concern to be pinpointed instantly. The strength of the software is that it is designed to present real life performance management, accommodating each customer s specialized needs without requiring masses of additional resources to support the system. Views is able to implement performance frameworks such as, but not limited to, the Balanced Scorecard (Kaplan and Norton methodology), Malcolm Baldrige, President s Management Agenda, EFQM, and any predefined in-house frameworks a client may have. All Views elements utilize an intuitive stop light color-coding system to indicate problem areas within an organization; thus, making it easy for managers to immediately identify areas of concern and take action before they become larger problems. The ability to view data from a variety of different perspectives at the click of a button allows users to truly understand the information being displayed and enhances the overall user experience. IMPLEMENTATION PROCESS DWSD and Black & Veatch progressed through a phased approach for PaDS implementation: Phase 1: Organizational Design Phase 2: Structural Design Phase 3: PaDS Finance Metrics Development Phase 4: Data Analysis and Strategic Plan Phase 5: Implement PaDS Phase 1: Organizational Design During Phase 1, Black & Veatch interviewed management staff within every DWSD operating division and mapped current business processes to: understand the organization s overall Vision, Mission, and Goals; validate the primary and supporting DWSD business units and their primary responsibilities; learn about existing day-to-day business processes undertaken by each DWSD Business Unit; identify performance culture issues; determine, and make recommendations for, the proper hierarchical performance management structure within the PaDS; and to design the organizational framework for Performance Management to facilitate the incorporation of existing KPIs and potential future performance metrics. Due to DWSD s current structure of utility management, the ease of implementing existing performance metrics into the performance monitoring structure, the consistency with other City of Detroit departments, and the ability to more readily capture direct accountability, the Department s PaDS was structured in a reporting organization format. Phase 2: Structural Design The structural design of DWSD s Operations performance hierarchy within the PaDS was established during Phase 2. The objectives consisted of: providing a well-defined structural model to reflect the organizational framework identified in Phase 1; qualifying and integrating the existing performance measures and KPIs into the structural design; and facilitating DWSD 5

6 participation, sign-off, and consensus on the structure and the corresponding performance measures. Views displayed within Views provide users with a quick and effective way to view the status of their organization s operational performance. The View displays the hierarchical performance structure in a color-coded (Red, Yellow, and Green) fashion according to the performance of all subordinate measures. Color-coded drill down indicators convey the performance of the worst sub measures of each of the high level areas. In this manner, not only is overall performance visible, but any underlying problems may be easily located and investigated. The Views View hierarchies allow visualization of the linkage of day-to-day performance measures with the strategic initiatives of an organization. Figure 2 presents the overall hierarchical performance structure for DWSD Operations implemented into the PaDS. Figure 2 DWSD Operations View As shown in Figure 2, the Operations View identifies performance measures across the entire DWSD organization, organized in a DWSD business unit format. The measures consist of those required to monitor the organization s effectiveness relative to industry standards and past DWSD performance levels, as well as identifying the current level of service provided to its wholesale and retail customers. Performance measures include work order completion percentages, percent distribution and collection system pump operability, critical equipment outages, inventory turn ratios, cost per million gallon of water/wastewater treated, and National Pollution Discharge Elimination System (NPDES) Permit excursions, to name a few. Workshops were next conducted across all operating divisions to clearly define existing performance metric definitions, targets, and ownership and to identify new performance metrics necessary for inclusion into the PaDS. During this process DWSD business units began to buy in to the PaDS concept, which created an environment where divisions shared what was really important for them to measure in order to effectively create a true performance management culture at DWSD. 6

7 Phase 3: PaDS Finance Metrics Development Phase 3 consisted of the creation of a second View within the PaDS designed to focus on the overall financial health of DWSD. The primary objectives of Phase 3 were to: define comprehensive finance metrics; integrate finance metrics into the structural design; establish target performance parameters; develop supporting PaDS finance algorithms; design the manual data-entry plan for PaDS; and coordinate the long-range Data Automation Plan with subsequent engagement phases. The focus of Phase 3 tasks was to provide DWSD with a comprehensive picture of its current financial condition relative to its overall financial plan, at any given time throughout its fiscal year. This was accomplished by separating the financial measurement areas into three components: (1) Capital Improvement Program ( CIP ) performance, which measures the Department s effectiveness in adhering to its published capital plan; (2) Current Financial Performance, which includes actual Debt Service Coverage, Revenues, and Revenue Requirements; and (3) Cash Position, which includes existing Fund balances and revenue collection efficiency. Figure 3 displays the Financial Health performance View implemented into the PaDS. Figure 3 DWSD Financial Health View Phase 4: Data Analysis and Strategic Plan The goals of Phase 4 of the PaDS implementation approach were to: validate and refine the data sources for the metrics that were developed in Phases 2 and 3; identify DWSD source-system data owners; and evaluate source systems and their production data. The results of the Phase 4 activities consisted of identification of the source-systems for every piece of data included in the PaDS. In addition, the future automation of data and source system interfaces and potential data automation roadblocks were analyzed. Due to the massive quantities of data and data systems utilized by the Department, it was decided that DWSD would first establish the PaDS using a monthly manual data entry plan and work to automate once the system was running efficiently and the DWSD staff was comfortable with it. 7

8 Phase 5: Implement PaDS Phase 5 was the culmination of the PaDS implementation approach. It consisted of: implementing each of the performance metrics identified in Phases 2 and 3 into the Views software; providing a well-defined structural model for PaDS; developing a DWSD-wide structural integration plan; developing the Homepage, Briefing Books, and Dashboards within Views; and conducting end-user and administrative training on the PaDS. The PaDS Homepage within the Views software consists of six distinct sections, each providing the end-user with a different method of obtaining valuable performance information. Figure 4 presents the DWSD PaDS Homepage, as it appears within Views. As previously discussed, Views were established for both the Operations and Financial Health performance of DWSD. Briefing Books present the View information in a more concise and easily understandable format without having to drill down to various levels within the performance structure hierarchy. Performance Maps allow users to create dynamic Strategy Maps, Process Maps, Cause and Effect diagrams, Business Flow diagrams and Geographical displays, etc., directly within the software. Users can create Reports through a menu-driven process by selecting from one of the 18 built-in reporting templates and customizing it to suit their specific needs by selecting key measures, locations and formatting options. The Information Links and Links sections allow the user to place often-used interactive links on their Homepage to facilitate access to information they use on a consistent and continual basis. Figure 4 DWSD Homepage 8

9 Various Briefing Books were established to disseminate the PaDS information to different enduser audiences. For instance, a Briefing Book was created for the DWSD Director, the DWSD PQCM, and the City of Detroit Mayor s Office. These Briefing Books allow users to organize the performance information they require in the manner necessary for peak management efficiency. Each Briefing Book section may contain measures, linked documents, and memorized reports. The measures included in each section may be selected individually or be displayed as the result of a filter that answers a specific business question (e.g., show me all measures that are performing greater than 120% of target or those that are performing less than 85% of target ). Each section may be named and arranged according to user preference. Sections may be set up for individual programs, divisions, measure types, individual employees, teams, business units, strategic goals, and/or objectives. Figure 5 presents a sample Briefing Book. Figure 5 Sample Briefing Book The Dashboard has been developed to provide the user with an easy-to-use and easy-tounderstand interface that provides historical performance information about any given measure in the system. The Dashboard can be customized on a measure-by-measure basis, allowing the user to define which elements are immediately visible when the dashboard appears. This includes, but is not limited to, elements such as measure descriptions, performance commentaries, data tables, graphs, and notes. The Dashboards have a series of tabs across the top which allow users to access specific and relevant performance information. Figure 6 presents an example of a Dashboard. 9

10 Figure 6 Sample Dashboard Trending of data is one of the most important aspects of a Performance Measurement system. DWSD s PaDS is capable of generating trending reports to present data for various period ranges such as This Year To Date and Previous Three Years. Visual trend analysis can easily identify patterns in measure performance and can offer a great deal of insight into how to address poor measure performance. Within the PaDS, all historical data is stored directly in the Views database, allowing the user to view and report on data for any period or period range he desires. This allows the user to view and track changes as they occur over time, and also allows the user to visually spot trends in measure data. The PaDS transforms plain data into actionable information through the use of commentaries. Commentaries describe why a measure is performing in a certain manner. Corresponding Action 10

11 Plans describe what actions are being taken to correct poor performance. DWSD requires measure owners to enter Commentary and Action Plans each month for every measure within the PaDS. By scrolling back in time or reviewing historic periods in time, the user can not only see changes, but can also see what actions led to a change in measure performance. RESULTS DWSD s new Performance Management System, PaDS, was effectively rolled out to the Department (and subsequently to the Mayor s Office) in November In January 2006, DWSD hired a full-time Information Systems specialist to manage the database, server, and technology-related components of the PaDS and to assist the PQCM, as necessary. As of February 2006, DWSD was fully utilizing and managing PaDS internally. Since its inception, DWSD s PaDS system has achieved some remarkable results, both from a strategic standpoint and from an operational perspective. Strategic benefits: Assures linkage of unit level KPIs to overall business level KPIs Enables DWSD to focus on results Supports continuous improvement Enhances communication at all levels Facilitates rational decision making Provides a Big Picture perspective Operational benefits: Allows DWSD management to make informed decisions in a timely manner Provides metrics for continuous monitoring Helps to prioritize actions based on reliable metrics Provides a visual link between day-to-day actions and strategy Helps to easily identify good performance Keeps the focus on issues through visual representation of cause-effect relationships Since going live in November 2005, DWSD has observed quantifiable results in various sectors of its business. For instance, in the Mechanical Maintenance Division, there has been increased productivity, reduced overtime, and increased work order completion. In the Financial Services Division, there has been a drastic increase in the Department s inventory turn-over ratio and purchase order processing times have been reduced. In addition, multiple operating divisions within DWSD have reported business process improvement and gained efficiencies as a result of the PaDS implementation. REFERENCES Nagel, R. W., Foster, B. D., and Williams, C. (2005). Managing is Easier When the Right Information is at Your Fingertips, AWWA/WEF Joint Management Conference Proceedings. 11

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