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Creative Solutions
Performance
Solutions
for our Environment
Presentation
to:
Your Name
Asian Development
BankAmerica
Veolia Water North
February 5, 2014
June 2010
Mark SANDERSON
0
Introduction & Agenda
Agenda
Introduction
Veolia & Public-Private Partnership Experience
What is Peer Performance Solutions (PPS)
Key Success Factors (Client/Veolia)
Successful Implementation
Compensation Model Paid for Performance
Contractual Considerations
Case Studies Implementation Results
Ideas to Move PPS Concept Forward
Summary & Conclusions
Q&A
1
Veolia & Public-Private
Partnerships
Sinopec Yanshan
Chengde HBIS
Dalian Tagal
Urumqi
Beijing
Hohhot
Tianjin
Cangzhou
Handan
Qingdao
Weinan
Changzhou
Xian
Baoji
Anhui JAC
Nanjing
Chengdu
Jiujiang
Tongling Tonghua
Changsha
Japan
Lanzhou
China
Kanhan
Pench 4
Full-city
Mihan
Niloth
i
Nangloi
Kunming
Guangzhou Changle
Huizhou
Liuzhou Shenzhen
Foshan
Jiangmen
Zhuhai
Hong Kong
Kong
Hong
Suzhou
Wyeth
Shanghai Pudong
Hangzhou
Taiwan
Hong Kong
Bijapur
Haikou
IIkal
KUWASIP
South
Korea
EcoCycle
IISc Bangalore
Showa Denko
Singapore
Saitama
Tokyo
Chiba
Ichihara (Showa Denko)
Yamato
Kahoku
Kizugawa
Osaka
Hiroshima
Matsuyama
Oita
Isahaya (Tarami)
Clementi-Bukit Merah
Paris-Ris Tampiness Sector
Tanglin-Bukit Merah Sector
South Western Singapore
Central & North Western
Singapore
Jurong & Jurong Island
Design/Build
Management
Contracts
Contract
Operations
Design/Build
/Operate
Build Own
Operate
Transfer
Concession
Design Own
Operate
Operating
Functions
Service &
Support
Functions
Strategic
Functions
2
What is Peer Performance
Solutions (PPS)
Accountability
of service
provision
Traditional Veolia model
(O&M, concessions)
Long-term contracts
Assets and / or
employees managed
by Veolia
Veolia in control with full
accountability
Private
operator
model
Implementation
PPS
Know-How
Public Sector
Model
Consulting
model
Technical or business
consulting projects
Short-term contracts,
usually without
implementation
support
No outsourcing of
assets / management /
employees
Ease to implement
9
PPS MODEL
Accountability of
service provision
Private
operator
model
3-12 months
PPS
model
1-5+ years
Typical contract length
5-30 years
Consulting
model
Ease to implement
10
PPS MODEL
External advisor
Integrated team
Owner or operator
Limited accountability
for implementation
Compensation for
performance
Faster implementation =
greater efficiency and
effectiveness sooner
1-5+ years
Typical contract length
5-30 years
11
Peer:
Performance:
Solutions:
12
3
Key Success Factors
(Client/Veolia)
14
Why?
15
16
4
Successful Implementation
Practice
Value
5+ years
STEP 2
STEP 1
STEP 3
TRACK
& VERIFY
STEP 6
Enabling and
sustaining change has
to be embedded in the
implementation of all
improvement
initiatives
Rigorous tracking
and verification of
impact is a critical
part of a successful
PPS project; the
work required to do
it right is significant
19
Comprehensive
performance
management
Stringent project
management and
governance
Optimal
organizational
design and clear
roles and
responsibilities
Operating
System
Clear vision,
direction and
compelling purpose
Strong leadership
alignment and role
modeling
Improved individual
capabilities and
continuousimprovement
mindset
OPERATIONAL
EXCELLENCE
Management
Infrastructure
Mindsets
and
Capabilities
20
Sustainable
solutions
Customer
satisfaction
Inclusion at
all levels
New innovative
ideas piloted
21
Benefits
Solids
content
(DS)
USD million
2.6%
From
liquid
stream
Sludge
thickeners
1.7%
Digesters
26%
Dewatering
To
disposal
Proposed changes
Solids
content
(DS)
Change height
of sludge blanket
4-5%
From
liquid
stream
Sludge
thickeners
2.4-2.6%
Digesters
Dewatering
26-28%
0.15-0.27
0.09-0.13
0.08-0.16
0.03-0.07
0.34-0.63
To
disposal
22
23
5
Compensation Model Paid for
Performance
Shared Savings
Promotes
identification of
efficiencies
Incentive to go
beyond lowhanging fruits
Key Performance
Indicators (KPIs)
Promotes best
implementation
of practices
Incentivizes
sustainable
improvements
1
Assessment
study
2
Assessment
& quick-wins
3
Implementation project
4
Comanagement
5
O&M
project
6
Full
concession
Time and
material
Flat fee (value pricing)
Shared savings
KPI-based performance
payments
E
Co-management fee
26
1
Assessment
study
2
Assessment
& quick-wins
3
Implementation project
4
Comanagement
5
O&M
project
6
Full
concession
Time and
material
For example, the
Pittsburgh PPS project
combines a management
fee with KPI-based
performance payments
and shared savings
Shared savings
KPI-based performance
payments
E
Co-management fee
27
6
Contractual Considerations
Biweekly/Monthly meetings to
review progress, resolve issues
and agree on priorities
Program Manager
PMO
Sponsor:
Sponsor:
Customer
Customer
Service
Service Team
Utility/Veolia
Sponsor: Field
OperationsTeam
Utility/Veolia
In-situ
observations,
data
collection,
interviews and
frequent
29
Frequency
Level Real tie
Daily
Weekly
Tracking mechanism
Bi-weekly
Quarterly
Mayor / Deputy
Mayors Operations
Utility Executives
Quarterly Project
Review
Downward
communication around
action planning and
corrective measures
Steering
Committee
Meeting Steerco
Department Head
Program Forecast
Client/Veolia Team
Weekly Meeting
Operations
Managers
Implementation
Team
Daily handover
briefing and
problem solving
Team
Performance
perfor-mance
Board
& Feedback
board &
Collection
action log
30
7
Case Studies
Implementation Results
$5m
$3m
$14m
$18 m
$42m
-
Financial Impact to Date $57.5m / Forecast Impact for the Program $108M
33
$0.15m/mth
Performance compensation
Key Performance Indicators
Set of 7 operational improvements (from
customer service to safety)
Operational Performance Improvements
Revenue enhancements:
- Key Customer Account Management
- Replace under-registering large meters
One-time
earned fee
$0.45m
Est. annual
savings
$1.1m
$0.3m
Cost reduction:
- Optimizing membrane plants retreating of
treated water
- Improve laboratory work efficiency
- Procurement strategic sourcing
$1.4
$0.5m
$1.7m
34
8
Ideas to Move PPS Concept
Forward
9
Summary & Conclusions
Performance
Know-how &
Experience
Doing the
right thing
Time
Veolia as a peer provides
extensive technical
knowledge, operations
experience and utility
management
Joint application of Veolia and
client know-how and
experience to identify those
performance improvement
initiatives bring the most
value to the client
Change
Management
Performance
Transformation
Doing it the
right way
Time
Drive ambitious and
sustainable performance
transformations using a
comprehensive change
management approach
Prioritize initiatives in the
context of the client
organization and
approach implementation
to achieve improvement
sooner
Time
PPS projects create
significant value for the
client over relatively
short periods of time and
prepare client to sustain
the gains and to continue
improving
38
The rapid and accelerating growth in the adoption of the PPS approach to
achieving sustainable performance improvement provides evidence of its
effectiveness in combining the benefits of private sector involvement
through a low-risk and relatively easy to implement commercial model.
The range and variation in scope and scale, and in tenure and commercial
arrangements, demonstrate the flexibility of the model to adapt, allowing
it to be aligned to the strategic plans and business imperatives of utilities.
39
10
THANK YOU
Questions?