ORANGE COUNTY SANITATION DISTRICT Memorandum

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1 ORANGE COUNTY SANITATION DISTRICT Memorandum January 28, 2015 TO: FROM: SUBJECT: Chairman and Members of the Board of Directors James D. Herberg, General Manager Fiscal Year General Manager s Mid-Year Work Plan Update I present to you the mid-year update for my Fiscal Year work plan. The work plan includes fifteen areas of focus for this fiscal year including safety and security, workforce planning, and operational resiliency. This work plan incorporates goals included in District s Strategic Plan and was reviewed with the Steering Committee in August My staff and I have been working towards completing all the goals by their respective deadlines. 1. Safety and Security Prioritize and implement measures to reduce risk and provide a secure and safe workplace for our employees, as well as protecting our regional infrastructure. Complete Administrative or Engineering Controls for high priority items identified in the Safety Study (SP- 145) by December 31, Develop an Implementation Plan for the standard Administration and Engineering Controls identified in the Safety Study by June 30, Complete a Vulnerability Self- Assessment and identify security improvements by December 31, Update: The Vulnerability Self-Assessment was completed ahead of schedule to identify security improvements. Administrative Controls for high priority items identified in the Safety Study are under development by the Risk Management division. The development of an Implementation Plan for the standard Administrative Controls identified in the Safety Study is on track to be completed by June 30, Future Water Recycling Work with Orange County Water District (OCWD) to jointly study improvements needed to support the Groundwater Replenishment System (GWRS) Final Expansion. Determine partnerships, needs, strategies, benefits and costs associated with recycling any remainder

2 flows from Plant No. 2 effluent water. Issue Request for Proposals (RFP) for SP-173 Effluent Reuse Study by January 31, 2015 and update agreement with OCWD by June 30, Update: OCSD is meeting with OCWD to identify and prioritize improvements needed to support the GWRS final expansion and working towards determining partnerships, needs, strategies, benefits and costs associated with recycling of Plant 2 effluent by June The RFP for SP-173 Effluent Reuse Study was advertised last month, ahead of schedule. 3. Infrastructure Stability Expand the current asset management program to enhance the maintenance of civil assets (concrete, structures, steel, etc.). Develop by June 30, 2015 a civil asset management plan including goals, implementation tasks and resource needs. Update: In collaboration with multiple departments, O&M staff has identified the most critical process structures and piping for inclusion in the civil assets maintenance program. The maintenance activities for these assets range from condition assessments, to cleaning, minor repairs, rehabilitations, coatings, and cathodic protection. Detailed reports and estimates have been developed to help identify the initial labor, craft, materials, tools, training, planning, IT, and support functions. These estimates will be used to develop implementation and cost alternatives/options. A program power point presentation detailing the program components and phases has been drafted, and a white paper is currently in development. 4. Operational Optimization Continue to evaluate and optimize operations at the Sanitation District focusing on: Efficiency Effective Utility Management Model Complete the review and self-assessment by December 31, Cost Savings By June 30, 2015, continue stakeholder outreach efforts, submit request to reopen ocean discharge permit, negotiate removal of disinfection requirements, and discontinue use of disinfection chemicals for effluent discharge through the long outfall, realizing an annual cost savings of $425,000. Best Management Practices Develop business work flows for implementing best practices for planning and scheduling maintenance, conduct training, and go-live with Maximo, the new computerized maintenance management system (CMMS) by June 30, Shared Services Explore and determine areas where shared services can improve performance and reduce costs for OCSD rate payers by consolidating functions. Page 2 of 8

3 Update: Efficiency Members of the EMT and MT completed the review and self-assessment of the Effective Utility Management Model. The results of the exercise will be used in the Strategic Planning process in Cost Savings The preliminary stakeholder outreach efforts to gain support for ceasing disinfection to OCSD s ocean discharge have been completed with presentations given to the Orange County Coastal Coalition, the City of Newport Beach and two presentations to the City of Huntington Beach. All of the stakeholder feedback has been very positive. The Compliance Division submitted a letter to the Regional Water Quality Control Board in mid- October, officially requesting the termination of disinfection to OCSD s ocean discharge through its 120 outfall as an operational change. Operations developed a contingency plan to reinstate disinfection should an emergency use of the 78 outfall or a Santa Ana River release be required. The Environmental Laboratory & Ocean Monitoring Division developed an enhanced monitoring plan that received staff level approval by both the Regional Board and the Orange County Public Health Agency consisting of additional near shore ocean monitoring and increasing beach monitoring from one to two days per week. When OCSD ceases its current disinfection processes approximately $425,000 will be saved each year in chemical costs alone. This will be in addition to energy and maintenance costs associated with the disinfection chemicals, staff time and the elimination of the environmental damage to the biological community area near our discharge point. The Regional Board staff has indicated they will recommend approval of OCSD s request after the USEPA has had an opportunity to review the proposal. A response to OCSD s request from the Regional Board is expected by March Best Management Processes All maintenance data from our existing Computerized Maintenance Management System (CMMS) has been transferred to our new Maximo CMMS. Business operating procedures are being developed. Communication meetings have been conducted across all key stakeholders to address questions, comments and concerns prior to the program implementation. A two month Planning and Scheduling pilot was implemented in October 2014 to help identify and correct process and procedural gaps. The final training sessions will continue through the end of January Weekly meetings are being held with all key process stakeholders to identify and correct issues. These meetings will continue after the go-live date of January 26, 2015 to ensure process stabilization. Page 3 of 8

4 Shared Services Orange County Local Agency Formation Commission s (OCLAFCO) Executive Director will be hosting a Shared Services Summit on February 26, 2015 to re-introduce its Shared Services Program. Representatives from school districts, Home Owner Associations, Orange County Business Council, County, Cities, and Special Districts will be invited. OCLAFCO facilitates collaborative efforts with agencies and organizations in OC to promote efficiencies and potential cost savings. 5. Communication Strategy Prepare a recommendation by June 30, 2015 for the Board of Directors on OCSD s corporate identity and the possibility of moving OCSD s brand from wastewater to a resource recovery facility. Update: Staff had preliminary discussions with the Legislative and Public Affairs Committee (LaPA) where direction was given to prepare a communication strategy for the Committee s consideration. A utility branding consultant was hired through the National Water Research Institute/Utility Branding Network to work with staff on the plan. The consultant held internal staff focus group meetings and received feedback from OCSD s Executive Management Team (EMT). Based on information gathered from these meetings, staff is developing a plan of action that will be presented to the LaPA Committee in March Following the Committee s review and feedback, staff will prepare a recommendation for action by the board of directors by June 30, Capital Budget Expenditure Target 90 percent expenditure on major Engineering Capital Projects for FY 14/15. Update: Through November 2014 the Capital Budget is on track with 78% expended. Based on trend and projection we expect to be above 90% at end of fiscal year. 7. Workforce Planning and Workforce Development Improve, increase, and implement tools to expand labor force capacity and staff skill levels by June 30, Update: Human Resources staff is working with management to develop forms and workflow processes to manage the following tools: Workforce Vulnerability Assessment The process includes departmental leadership, evaluating the organizational chart, and identifies vulnerable positions based on three criteria: retention, criticality, and difficulty to fill. Guidelines and forms are nearly complete and will be ready to roll out by February The assessment will assist management in Page 4 of 8

5 identifying workforce needs for the upcoming budget process scheduled to begin in February Talent Readiness Assessments The process includes departmental leadership evaluating staff and identifying key talent, as well as possible development efforts. Guidelines and forms are nearly complete and will be ready to roll out by February Individual Development Plan (IDP) - Management and supervisory staff are encouraged to partner with each of their staff to create individual development plans. Divisional Development Needs With the decentralization of the training budget from Human Resources to each division, management will be able to analyze the information collected from workforce assessments and individual development plans to determine divisional development needs. Workforce Planning Action Plan - While identification of the risks is an important foundation, ultimately the action that the organization takes to address the areas of vulnerability provides the most value of such an analysis and therefore is a critical step. Managers and Supervisors are encouraged to prepare and implement a Workforce Planning Action Plan for each position identified in the recent vulnerability analysis that report directly to them. HR has also launched the pilot program with Veterans First, Orange County with the first vocational intern starting this month. 8. Administrative Facilities Prepare and present an Implementation Plan for the replacement of Plant No. 1 administrative facilities to the Board of Directors by June 30, Update: HDR Engineering began a special study in July 2014 to determine design needs. Additional refinement of desired scheme including reduction of Lab square footage and scope increase to compare options that include keeping existing Lab and Fleet may impact the goal. The project is still on target to present an Implementation plan to the Board by June 30, Operational Resiliency By June 30, 2015 complete a comprehensive review of the Integrated Emergency Response Plan with three table top drills exercises, complete a risk register and develop a scope of work for a business continuity plan to ensure OCSD is prepared to continue operations in the event of a significant event. Page 5 of 8

6 Update: To date, two tabletop drills have been completed. The third tabletop drill will be completed before June 30, The risk register project launched this month and the Business Impact Analysis phase of the Business Continuity Plan has begun as well. 10. Odor Control Master Plan Develop a recommendation on odor treatment technologies and levels of service goals for both plant facilities. Issue a request for proposal for SP-166, Plant Odor Control Master Plan by January 31, Update: The request for proposals for the odor control master planning project proposal (SP- 166) will be issued this month and we are on target to complete Odor Control Master Plan by June Research Finalize fuel cell research project and present findings with recommendations to the Board of Directors by December 31, Identify and propose two research opportunities to the Board of Directors by June 30, Update: A proposal from the National Fuel Cell Research Center to continue the use of Fuel Cell and Hydrogen production equipment is due by the end of this month. Staff are also in discussions with technology companies, for a Super Critical Water Oxidation demonstration plant to convert sludge to energy. 12. Energy Efficiency Evaluate OCSD facilities, through an energy audit, to identify energy savings strategies that are economically and operationally feasible. Present findings and recommendations to the Board of Directors by June 30, Update: In August 2014, OCSD entered into an agreement with The Energy Network (TEN) to provide project management and technical assistance to identify energy savings opportunities at both plants and the pump stations in the collection systems. TEN is administered by the County of Los Angeles for the greater Los Angeles area and authorized by the California Public Utilities Commission to identify energy savings at no cost to public agencies. The kick off meeting for this project was held in September The attendees included representatives from Southern California Edison, Sempra Energy, TEN and their sub consultants, and OCSD. A project implementation plan was completed and data collection is in progress. Data collection and analysis is scheduled to be complete by March 2015 and the preliminary audit report is scheduled for May Once the audit report is received and analyzed, Staff will present the findings and recommendations to the Operations Committee. Page 6 of 8

7 13. Labor Negotiations Support chief negotiators in timely bargaining over successor labor agreements in compliance with the Meyers-Milias-Brown Act. Update: SPMG labor agreements (MOUs) expired June 30, OCSD has been meeting and conferring in good faith with SPMG in an effort to reach agreement on successor MOUs, beginning April 2, There have been nineteen (19) negotiation sessions to date, where sixteen (16) proposals have been exchanged and eleven (11) issues have been tentatively resolved, pending agreement on successor Memoranda of Understanding. On December 9, 2014 OCSD met with SPMG at which time SPMG delivered its most recent counter proposal. On December 17, 2014, the Board of Directors instructed the Chief Negotiator to reject the SPMG counter proposal, and provide its own counter proposal. The following day, December 18, 2014, OCSD delivered its most recent counter proposal to SPMG and is awaiting a response. 14. Financial Viability Secure an Investment Management Company by October 31, Update: OCSD has used the same investment manager for several years to manage the District s short-term and long-term investment portfolios, it was deemed prudent to re-evaluate the availability of these services in today s open market, from both a cost and a performance basis, and to conduct a competitive proposal process for these services. A panel consisting of three staff members and the District s investment advisor, Callan Associates evaluated candidates that were screened from a pool of 300 firms providing investment services. Six firms received more detailed analysis with the four top-rated firms receiving interviews. The panel narrowed the field to two firms from which to choose, Pacific Investment Management Company (PIMCO) and Chandler Asset Management. Based on its recent performance and long-term stability, the Board approved the selection of Chandler Asset Management as its new investment manager. The agreement between OCSD and Chandler to provide investment services became effective in November Classification and Compensation Study Select consultant and conduct a classification and compensation study to be completed by December 31, Complete employee feedback and management review of position description questionnaires by June 30, Update: The procurement phase for the classification and compensation study is nearing completion, with consultant selection anticipated by January 30, Four (4) vendors provided responsive proposals that are under consideration. The evaluation committee includes Page 7 of 8

8 employees from management and staff levels, including bargaining unit representatives. Position description questionnaires will be completed by employees and reviewed by management in the next phase, to be completed by June 30. The classification and compensation study is on track for completion by December 31, Page 8 of 8

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