Water supply in developing countries:
The Game
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Student Industrial Engineering &
Management – University of Twente
Student number: s0095249
In cooperation with:
Supervisor:
Dr. M.J. van Riemsdijk
Co-reader:
Ir. W.Bandsma
Paul Durenkamp
Niersstraat 22 – II
1078 VK Amsterdam
06-41617005
p.durenkamp@student.utwente.nl
University of Twente
Industrial Engineering &
Management
Student number: s0095249
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Table of content
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7
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1.1.
Occupational parties and interests .......................................................................................... 7
1.2.
General structure of the game ................................................................................................ 8
1.3.
Learning objectives .................................................................................................................. 8
1.4.
Research question ................................................................................................................... 9
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Water enterprise: The water supply system and the organization ....................................... 11
2.1.1.
Production and treatment of water .............................................................................. 12
2.1.2.
Quality of water ............................................................................................................. 12
2.1.3.
Distribution of water...................................................................................................... 12
2.1.4.
Financial system ............................................................................................................. 13
2.1.5.
Organisation of a water enterprise................................................................................ 13
2.2.
3
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Effectiveness within a water enterprise ................................................................................ 15
2.2.1.
Objectives ...................................................................................................................... 15
2.2.2.
Effectiveness in a water enterprise ............................................................................... 16
h
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The Mozambiquan water system and the organization ........................................................ 20
3.1.1.
Production & treatment ................................................................................................ 20
3.1.2.
Quality of water ............................................................................................................. 20
3.1.3.
Distribution of water...................................................................................................... 20
3.1.4.
Financial system ............................................................................................................. 21
3.2.
Effectiveness of a Mozambiquan water enterprise ............................................................... 21
3.2.1.
Autonomy – Open systems quadrant ............................................................................ 21
3.2.2.
External support – Open systems quadrant .................................................................. 23
3.2.3.
Structure – Internal process quadrant .......................................................................... 24
3.2.4.
Configuration – Internal process quadrant.................................................................... 25
3.2.5.
HRM-policies – Human relations quadrant .................................................................. 26
3.2.6.
Work system – Human relations quadrant.................................................................... 27
3.2.7. Outcomes – Rational goal quadrant .................................................................................... 27
3.2.8.
Conclusion...................................................................................................................... 28
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The model .............................................................................................................................. 30
4.1.1.
The Key Performance Indicators in the game................................................................ 30
4.1.2.
The ‘Overall KPI’ ............................................................................................................. 30
4.1.3.
The decision factors (DF’s) ............................................................................................. 31
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The results and future plans .................................................................................................. 40
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The integration of the ‘integrated model of effectiveness’ into the game ........................... 35
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Conclusions ............................................................................................................................ 42
6.2.
Recommendations ................................................................................................................. 43
6.3.
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Reflection ............................................................................................................................... 44
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1
5
List of acronyms and abbreviations
VEI
UNESCO-IHE
(UNESCO)
IHE
NHL
KPI
DF
GOM
DMF
FIPAG
CRA
MOPH
DNA
CMS
SMART
WHO
ESA
AfDB
NDC
MTn/MZN
IWA
NRW
-
Vitens-Evides International
United Nations Educational, Scientific and Cultural Organisation
-
International Institute for Hydraulic and Environmental Engineering
Noorderlijke Hogeschool Leeuwarden
Key Performance Indicator
Decision factor
Government of Mozambique
Delegated Management Framework
Fundo de Investimento e Património de Abastecimento de Água
Regulaqzo do Abastecimento de Aguas
Ministry of Public Works and Housing
National Directorate of Water
Construction and management simulations
Simple Multi Attribute Rating Technique
World Health Organization
External Support Agency
African Development Bank
Netherlands ’Development Cooperation
Mozambiquan metical (1 euro = 27,59 MTn)
International Water Association
Non revenue water
6
1. Introduction & background
This bachelor thesis is about the simulation of a water enterprise in a development country as a
virtual management game. In this case, the developing country is Mozambique that ended the
prolonged civil war in 1992. Mozambique can be seen as a Third World country, but in a relatively
stable environment. This stable environment is quite essential because it gives opportunities for
huge developments, which can be converted into a game.
Vitens and evides, a Dutch water company, came up with the idea to create a simulation game about
water enterprises in developing countries, in which managers (the game players) can learn from
certain decisions and can discuss about it with their colleagues (teammates). Thus, the
communication between the different kinds of managers would be improved and the consequences
of the strategic and tactic decisions (on the short-term as well as on the long term) can be
experienced.
The organisation of a water enterprise has to be analysed, to create a model for the game. A water
enterprise is very different compared to other companies. It has other objectives than normal profit
and non-profit organisations and for managers it is more difficult to get grip on the objectives and to
achieve them. The objectives and the way the organisation of a water enterprise tries to achieve
these objectives provide principles for a simulation model. First, the theoretical basics of
effectiveness in water supply and the organisation of a water enterprise will be described. Then,
literature about ‘effectiveness’ will be discussed and applied in the context of a water enterprise.
These theories will be used to analyse the case of Mozambique. Thus, a clear understanding will be
given about water enterprises in a developing country like Mozambique. Although it is a simulation
game, it is impossible to copy the exact reality. Therefore, the next step will be the transformation
from the reality to the simulation game, such as what kinds of choices are made and what lacks the
prototype of the game. Eventually conclusions about the game and the process are stated and
recommendations are given for further progression on this prototype. The main practical results are
stated in the appendixes.
What a water enterprise exactly is will become more clear during this report. For the simulation
game some adjustments are made: In reality the water enterprise is the ‘operator’ (the organization
that provides the water to the people), but in this simulation game it has more ‘rights’, like the asset
holder (the agency responsible for among others the pipeline network) and the agency who
determines the water tariffs. In reality, these roles are often split up; government determines the
tariffs and an organisation between the government and the operator keeps track on the assets
(water network, pumps etc.).
1.1.
Occupational parties and interests
The Dutch water companies Vitens and Evides, the two largest water companies in The Netherlands,
set up this ambitious project in 2007 Both companies joined a group called
(VEI). VEI gives management support in developing countries and helps with technical
and operational business tasks. (Vitens-Evides Annual Report, 2007)
Aside of the initiator VEI, more parties are involved in this project: To create a game based on
(IHE) joined the project. IHE carries
knowledge, accurate information and experience
out research, education and capacity building activities in the field of water, environment and
infrastructure. IHE is the largest postgraduate water faculty in the world and the only institution in
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7
the UN system authorised to confer accredited MSc degrees and the promotion of PhD’s. (UNESCOIHE Annual Report, 2008)
The knowledge and manpower for the actual design and creation of the game is found at the
(NHL), a university of applied sciences, where students
combined their minor courses with this challenging project.
My part in the project is focussed on the model side of the game. To create some structure and
and a
. The model
clearness, the development of the game is split up in a
behind the game is set-up by IHE, where NHL takes care of the design and VEI has a controlling and
coordinating role.
H
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With a broad and versatile project group, there are many different interests for the creation of this
game. The main purpose of the game is dual:
- The game is supposed to be a learning tool for managers of water utilities in development
countries.
- It will be used as a marketing tool to give attention to the water sector as an employer.
These purposes are mainly the interest of VEI, but the interest of the other parties is:
- The creation of a learning tool in which students can play the same simulation game all over
the world, considering IHE wants to create a connection between students in different
cultures all over the world.
- NHL wants to use the game as a project where students can experience what is needed to set
up a real computer game and connect it with several ‘minor’ courses.
1.2.
General structure of the game
It is necessary to give a global impression of the game (as build so far) to make the reading of this
report easier and more understandable. The game is played on top-management level of a particular
water utility in a development country (in this case Xai-Xai, Mozambique, see appendix 1). Four
managers of water enterprises are the players of the game and will constitute a team and compete
against (an) other team(s). The four different roles of the players are General manager, Operational
manager, Financial manager and Commercial manager. They have to work together to make the right
investment decisions and the results can be noticed after each round in the form of a set of ‘Key
will eventually give the overall performance of the
Performance Indicators’ (KPI’s). The
team. Each round represents a period of one year, the managers have to spend their budget wisely,
and after about ten rounds, the team with the highest overall KPI wins. It is important to have a focus
on planning, cooperation and doing business with limited resources to win the game.
I
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1.3.
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Learning objectives
VEI experienced several problems in projects in Mozambique and in other developing countries as
well. VEI stated two general learning objectives for the game to cover these problems, assuming that
these learning objectives will improve the performance of water enterprises in developing countries.
The main objectives are:
1)
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In a typical functional organizational structure employees work for their own (division). This
can lead to poor horizontal coordination among departments and decisions may pile on top,
which causes a hierarchy overload. (Daft, 2007) Everybody has his own objectives and
8
interests in this game, but to play the game successfully the managers have to work
together.
2)
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You can spend the money only once in this game. This is not very different in developed
countries than in developing countries. The player can test investment and can see what the
results are on the short-term and on the long-term. This way, the player learns what is best
for the water enterprise and is able to discuss this with its teammates. After a couple of
rounds, the result will also be discussed with a teacher and the other teams.
1.4.
Research question
The questions that need to be answered are based on a ‘design problem’. This design problem is to
simulate a water enterprise in a developing country in the form of a virtual simulation game. Three
steps need to be taken to solve this design problem:
1. The transition from the design problem to the scientific literature.
2. The transition from literature to reality. (The case of Mozambique)
3. The transition from reality to a virtual simulation game (model).
In the first stage, relevant literature will be used to get a better understanding about a water
enterprise in a developing country. Literature about how a water enterprise is organized and how the
water system works is necessary to get a good understanding of such an organization. Only a
description of a water enterprise is not enough to base a simulation game on. Like in other
organizations, objectives need to be achieved to satisfy the different stakeholders (for example
customers, financers and government). A water enterprise has other objectives than ‘normal’ profit
organizations. (Daft, 2007).
When the organization and water distribution system of a water enterprise in a developing country is
discussed, the second stage will be the transition from the theory to reality. The ‘reality’ in this case
is a water enterprise in Mozambique, a developing country in southeast Africa. This case has been
chosen because VEI had a lot of experience here. In the last decade, a lot of progression is acquired,
but there is still a lot to accomplish; for example, the coverage is not 100%, which means that not
every Mozambiquan citizen has access to water.
Once the organization, the system and the effectiveness of Mozambiquan water enterprises are
discussed, the last step will be to transform this case to a virtual simulation game. In the third stage,
the simulation game will be discussed; what kind of decisions are made why and what the
shortcomings are in the prototype of the game. Prvious to this discussion, the structure of the game
will be explained. In the fourth chapter, the important factors in the game and the gameplay will be
explained. Finally, conclusions and recommendation will be given about the current state of the
game and the future possibilities.
These three transition steps can be expressed in the research question. This main research question
is:
-
How could a water enterprise in a developing country be simulated into a virtual
management game?
9
Sub-questions:
First, it is important to get a good understanding how a water enterprise is organized and how the
system works. Then, there will be a discussion about the objectives and the degree up to which these
objectives are achieved in a water enterprise:
-
What are the relevant organizational factors in water enterprises and systems in a
developing country?
How is ‘effectiveness’ defined in a water enterprise in a developing country?
The third sub-question will be the transition to the case of Mozambique:
-
How are the organizational factors and the effectiveness in a water enterprise applicable for
the water enterprises in Mozambique?
The last transition will be the case of Mozambique into the virtual simulation game.
-
What kinds of decisions have to be made to transform a water enterprise in Mozambique
into a virtual simulation game?
10
2. Theoretical framework
The theoretical framework consists of two parts: The first part describes the scientific literature
about the water distribution system and the organization of a water enterprise. The second part
discusses the literature about objectives in a non-profit organization, especially in water enterprise,
and the effectiveness in achieving these objectives. We will start by getting a better understanding of
a water enterprise. What are the basics of water supply and what does the organisation look like:
2.1.
Water enterprise: The water supply system and the organization
There is not much variation in water enterprises, but a water enterprise differs from ‘normal’ nonprofit organizations. This gives a water enterprise a unique character. Public water supply plays an
important role in the general welfare, collective security, public health of the population, but also for
economic activities and environmental preservation. Therefore, it is an essential service for the
community and is a so-called ‘service of general interest’. These kinds of services apply to major
economies of scale. Besides those major scale economies, there is also a significant scope for
efficiency, where the production costs tend to decrease as similar activities are integrated. This can
be accomplished by synergies in the management of human resources, equipment and facilities.
(Alegre, et al., 2006)
A distinction can be made between different markets. The most important one is the transaction
market between the water company and the final user, which is a natural monopoly. This market
form contributes to limitation of competition with regard to the service to customers. This is not only
the case when a government regulates the water supply, but a natural monopoly can occur as well
whenever the costs of the production average marginal costs decreases and the productive system
develops (due to the existence of scale economies). A result is that in water enterprises there is no
similar stimulus like in profit-companies to increase efficiency and effectiveness. This is a notable
weakness of this sector. (Alegre, et al., 2006) However, this does not mean that there is no stimulus
at all to increase efficiency and effectiveness. This stimulus comes from an external factor, like
government, customers, and funders (like the African Development Bank (AfDB), VEI and
government funds). (Alegre, et al., 2006)
The water supply sector faces major challenges, not only for the developing countries, but also for
developed countries. The sector has to keep up with the population growth, ensuring sustainability
of current and new services and improving the quality of the services. Maintaining a truly sustainable
system in the water supply sector is as difficult and important as making the initial capital
investment. The provision of safe water is a service and requires a service-orientated attitude. Water
services may normally be set at an affordable level for the customer, managed, and operated in
accordance with the principles of good business practice and with the regulations, which are
intended to protect the customer and the environment.
The form of management will vary according to the local situation and can be public, private or a
partnership between both. In any case, the continuous improvement of the quality of service is an
essential target to be achieved. (Alegre, et al., 2006)
In the next paragraphs, the water supply system (the technical system) and organisation
(organizational system) will be discussed. First, it starts with the water supply system, as mentioned,
,
if necessary,
this is a system with not much variation: The raw water must be
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11
and the system has to be
. (Hoffer, 1995) Hoffer made this distinction and is
followed by the description of the organisation of a water enterprise:
d
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2.1.1. Production and treatment of water
Ground water and surface water are the two main sources for raw water. In some cases, there is an
intermediate source, called infiltrated water. This surface water is infiltrated and the soil is being
used as ‘natural’ filtration. Big cities often depend on surface water, because the availability of
sufficient sustainable groundwater is limited. Nevertheless, (deep) ground water is usually preferred,
because it is filtrated in a natural way over long periods of time. Not all ground water is proper for
making drinking water, because it may contain elements that need to be removed, like fluoride,
magnesium and iron. When the water is contaminated, it needs full treatment and in developing
countries ‘disinfection’ is the most common way. Even if the source is safe, it needs treatment,
because there is also a risk that the water will be contaminated during distribution.
Surface water is the most common source for raw water and can be taken from lakes, rivers and
canals. The use of surface water allows for much bigger production units than ground water. The
treatment process depends on the quality of the raw water, but disinfection is always necessary,
followed by slow sand filtration, rapid sand filtration with or without coagulation, activated coal
treatment. This is the customary method, but as mentioned the steps depends on the level of
pollution in the raw water. (Hoffer, 1995)
2.1.2. Quality of water
The World Health Organisation (WHO) provides
standards, presented as guideline values. It
represents the level of a certain concentration or amount of a constituent that ensures aesthetically
pleasing water and does not result in any significant risk for health of the user. Nevertheless, safe
drinking water is a relative concept. (Premazzi, 1989) In a lot of countries national standards are
applied, but Premazzi (1989)argued that the selection of a national standard at a level that is
somewhat higher than the guideline values do not necessary imply that the water would not be safe
enough. The safety (or uncertainty) factors incorporated in the guideline value may be more than
enough to accommodate some compromise for the sake of practicality, without having an effect on
public health. The removal of magnesia and iron does not solve health problems, but is desirable for
discolouring the water. (Premazzi, 1989)
m
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a
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The safety of water is not only determined at the source. It is a matter of money and priority to what
extent the standards are met and set. There are also big risks for contamination during the
production, storage and distribution, especially in hot climates. Practical examples are leakages, too
long held in storage reservoirs and unhygienic materials. (Hoffer, 1995)
2.1.3. Distribution of water
The most common way of distributing water is via a piped water supply system, especially in urban
areas. This system provides every a connection to every house, but when this option becomes too
expensive, the use of public taps is a good solution. (Other words used for public taps are standpipes
or faucets.) Another option is that public or private vendors sell the water (per bottle) to the local
customers.
The use of a piped water supply system requires a network of a certain quality. This quality depends
on the age of the network, maintenance of the network and the materials used. As mentioned in the
12
paragraph above poor quality of the network does not only mean wasting of the water but also a
decrease in quality when the polluted soil or groundwater contacts the clear water in the pipes. This
problem is huge in developing countries and is called ‘unaccounted for water’ (UfW) (appendix2).
UfW is the total amount of produced water minus the total amount of metered consumed water plus
the estimated non-metered consumption. Especially this last part is hard to assess, because of illegal
connections, bad condition of meters and/or simply not metering at all. This number has to be
assessed and results in contrary interest. The water supply managers tend to overestimate
consumption to cover up excessive UfW, while policy makers underestimate the consumption to
reduce the need for capital investments in the system. (Hoffer, 1995)
2.1.4. Financial system
A regular accounting system is not enough for a water enterprise, besides a regular accounting
system the enterprise needs a comprehensive financial-administrative system that includes billing
and collection money and meter reading.
The water supply system itself can be financed in many ways. Most of the time the government plays
the most important role, but in developing countries, external (international) organisations also
provide funds, loans and subsidies. The prize of water is also very important, because it eventually
determines the main incomes. Consumption charges can be set up in different ways. When meters
are missing, flat rates are commonly used, this is often based on the number of the people living in
the house or the number of rooms.
Important to mention are the different perceptions for the pavement of water. Many people
consider water a free commodity, where Moslem societies even contend that water is a religious
right and Socialists state that this social commodity has to be provided free of charge. In the end the
customer is the one where the costs are originated and this needs to be paid either direct or indirect
(taxes). Hence, water should be considered as an economic good, because costs are originated by the
customer. These tariffs are most of the time a political issue, and politicians use the water tariffs to
attract and keep voters. Eventually this results in a poor level of service (by lack of funds) or all kinds
of subsidiaries that needs to be paid by the customer anyway. (Hoffer, 1995)
2.1.5. Organisation of a water enterprise
As mentioned in the introduction, a water enterprise is a good example of a functional organization:
“In a functional structure activities are grouped together by common function from the bottom to
the top of the organisation” (Daft, 2007). Following Daft, this structure works best with one product,
which is undoubtedly the case in a water enterprise in a development country. This allows economies
of scale within functional departments and enables in-depth knowledge and skill development. It is a
good structure when an organization wants to accomplish functional goals and maximize profits.
Another distinctive characteristic of a water enterprise is its non-profit character. Tulsian & Tulsian
(2000) distinguish eight different kinds of non-profit organisations, based on the service they
provided. A water enterprise is stated as
, which are formed for providing
water, electricity, sanitation and other essential services. Daft (2007) mentionsthat the primary
difference is that managers in non-profit organisations direct their offers toward the generation of
some kind of social impact, instead of a more financial impact like profit organisations. These unique
characteristics and necessities of non-profit organisations create challenges for managers. Daft also
mentioned that financial resources typically come from government appropriations, grants and
m
u
n
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c
i
p
a
l
o
r
g
a
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i
s
a
t
i
o
n
s
13
donations rather than from the sale of products or services to customers. (Daft, 2007) As mentioned
in the paragraph above, this is not totally true. A lot of income comes from the customer, but
especially in developing countries a lot of income comes from government and external
(international) organisations as well. Daft continues that non-profit managers committed to
customers with limited funds, must keep the organisational costs as low as possible and demonstrate
a highly efficient use of resources. Non-profit organisations do not have a conventional bottom-line
like profit organizations, which creates another problem:
“
M
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.
”
It is much more difficult to measure intangible goals (like ‘improve service level’ ) than to just
measure just the ‘tangible’ financials. (Daft, 2007) Without a clear direction, it could result in slow
response time to environmental changes, less innovation and involves a restricted view of the
organizational goals. This results in the next chapter we will discuss extensively the ‘effectiveness’ in
a water enterprise.
Managers of non-profit organizations also deal with many diverse stakeholders and must market
their services to attract not only customers, but also volunteers and donors. This sometimes create
conflicts and power struggles among organizations. (Daft, 2007) Following Alegre et al. (2006) the
important stakeholders in water supply are (see figure on the right):
-
-
-
T
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; can be public, private or combines organisations who manage the
s
water supply system.
; direct user.
; not a direct connection to the system, but may be affected by it or its
impact on the surrounding environment.
; for example environment organisations, consumer protection
agencies and other pressure groups
; can be on local,
regional and national level
; responsible for
economical and quality of service
regulation and for setting up and
verifying compliance with statutory and
other obligations.
; very important in
such a capital-intensive sector as the
water industry
; international agencies (from
humanitarian associations to political
organisations and multi-national
companies)
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)
14
2.2.
Effectiveness within a water enterprise
Effectiveness can be described in various ways. Daft’s (2007) definition is: “the degree up to which
contemplated objectives are achieved”. Two factors in the definition of ‘effectiveness’ are mentioned
clearly, ‘the objectives’ and ‘the achievement’ (of these objectives). This will be discussed in the next
subchapters.
2.2.1. Objectives
Irrespective of the nature (public, private of combined) or geographical extent, it may be presumed
that all water supply enterprises share a common purpose and management objectives, which may
be stated as:
(Faria &
Alegre, 1996)
“
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”
By taking into consideration the relationship between stakeholder, resources and values, Alegre et al.
(2006) identified five types of management objectives:
-
Provide an appropriate level of service to customers
Obtain the highest possible productivity from human resources
Protect and ensure sustainable use of water and other natural resources
Achieve the most efficient use of financial resources
Plan, construct, maintain and operate the enterprise’s physical assets as efficiently and
effectively as possible (Alegre, et al., 2006)
The day-to-day business at a water enterprise in developing countries is to get closer to these
drinking water, does not have a
objectives. A large share of the population does not have
and does not have the
resources to buy the water. Managers focus on the
increase of coverage (more people can get water), quality and affordability (reduces costs; decrease
UfW, cross-subsidiaries etc.). The day-to-day focus on these objectives and the pressure from
international organisations and government on these topics make it a useful and clear objective for a
water enterprise and is useful as well in a simulation game. It fits in well with the first learning goal of
the game, described in the first chapter: What are the consequences of the decisions based on this
objectives by the management team?
l
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Management objectives of a water enterprise:
1.
: Briefly, this is actually the organizational
objective, but what needs to be added is an appropriate level of service for new costumers,
thus expand your network and an increase of coverage. This is an important objective in the
enterprise and the game because it serves the main objective and gives attention to the
customer. Everything can be done well within the enterprise (the team), but eventually the
customers have to profit from it.
: Because the objective of a
2.
water enterprise is not the same as a profit organisation, objectives are not always clear to
everybody. It is important to share common goals, especially in a functional organisation
where, following Daft (2007) it could otherwise result in slow response time to
environmental changes, less innovation and involves a restricted view of the organizational
goals.
P
O
r
o
b
v
t
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o
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s
15
3.
Although the raw
water is often free, it is important to protect and ensure it to guarantee the safety (quality of
water) and the availability of water. A lot of surface water (for example lakes) is shared with
other countries and they have to keep an eye on pollution.
4.
: Although profit is not the focus in water
enterprise, the way of using your money is very important. This is especially the case in
developing countries where large shares of the financial resources are loans from the
government and external (international) organisations.
5.
In combination with the previous point, this is one of the main starting
points of the game. Planning and maintaining are aspects that can be further developed in
developing countries. With minimal financial resources, it could be attractive to invest and
obtain short-term goals, but this could result in poor condition of the assets (like network,
pumps and meters).
:
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2.2.2. Effectiveness in a water enterprise
Effectiveness is more difficult to define in non-profit organisations than for profit organisations. It is
useful to explain the different dimensions of 'effectiveness' and how this relates to a water
enterprise. Quinn and Rohrbaugh (1981) set up the ‘competing values framework’ to analyse
organizational effectiveness and discover two major dimensions underlying conceptions of
effectiveness. The horizontal dimension is the
: There can be an emphasis on the
well-being and development of
people or a more external focus on
Flexible
the well-being of the development
of the organization itself. The
vertical dimension is focused on
Means:
Means:
Flexibility,
readiness
& external
the
Cohesion, morale & training
evaluation
: This could be the
Ends:
emphasis on stability and control
Ends:
External support & resource
Human resource development
acquisition
or flexibility and change. The
dimensions seem to be in conflict
with each other, it creates a
paradox where an organization
needs to be ‘externally focused
Means:
Means:
and flexible’ and ‘internally focuses
Information management &
Planning & goal setting
communication
and controlled’ at the same time.
This results in four quadrants with
Ends:
Ends:
Stability & equilibrium
Productivity, efficiency & profit
their own means and ends (figured
on the left):
o
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F
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2
:
C
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p
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v
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a
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w
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r
k
(
Q
u
i
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n
&
R
o
h
r
b
a
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g
h
,
1
9
8
1
)
“Incorporates the value of
an internal focus and a flexible structure. Hence, management concern is for the
development of human resources. Employees are given opportunities for autonomy and
development. Management works toward the sub goals of cohesion, morale, and training
16
External
o
s
u
opportunities. Organizations adopting this emphasis are more concerned with employees
than with the environment.” (Quinn & Rohrbaugh, 1981)
: “Is a combination of external focus and flexible structure.
Management’s primary goals are growth and resource acquisition. The organization
accomplishes these goals through the sub goals of flexibility, readiness, and a positive
external evaluation. The dominant value is establishing a good relationship with the
environment to acquire resources and grow. This emphasis is similar in some ways to the
resource-based approach.” (Quinn & Rohrbaugh, 1981)
: “It reflects the values of internal focus and structural control. The
primary outcome is a stable organizational setting that maintains itself in an orderly way.
Organizations that are well established in the environment and simply want to maintain their
current position would reflect this emphasis. Sub goals include mechanisms for efficient
communication, information management and decision-making. Although this part of the
competing values model is similar in some ways to the internal process approach, it is less
concerned with human resources than with other internal processes that leads to efficiency.”
(Quinn & Rohrbaugh, 1981)
: “Represents management values of structural control and external
focus. The primary goals are productivity, efficiency, and profit. The organization wants to
achieve output goals in a controlled way. Sub goals that facilitate these outcomes are
internally planning and goal setting, which are rational management tools. The rational goal
emphasis is similar to the goal approach.” (Quinn & Rohrbaugh, 1981)
-
O
-
e
p
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a
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a
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t
t
Hoffer (1995) transformed these four quadrants into an
and split
up the four quadrants into concrete variables that are applicable for water enterprises. The
‘transformation’ of the model of Quinn and Rohrbaugh represented below. (The colours of Hoffers’
model (below) correspond to the colours of the model of Quinn and Rohrbaugh on the previous
page)
M
I
n
u
r
e
3
:
I
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t
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g
r
a
a
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d
o
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(
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,
1
f
e
c
t
i
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n
e
s
s
External
support
Worksystem
Internal focus
m
f
9
9
Environment
Authority
(Autonomy)
Outcomes
(effectivene
ss)
Environment
Configuratiom
External focus
g
r
Input
HRM-Policies
i
g
Throughput
Structure
F
e
Community
involvement
Output
t
5
External focus
)
17
Hoffer defined two variables for the
O
e
p
n
s
s
y
t
e
q
m
u
a
d
r
a
n
(
t
g
r
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e
n
o
c
l
o
u
r
e
d
):
/
-
A
: The ability for acquisition of resources. (Important resources are: Raw
water, human resources and financial resources.)
: The ability for acquisition of resources.
o
: The ability to maintain an adequate level of net benefits (World Bank,
o
1990)
: The ability to obtain external support to pursue its policies. This is
intertwined with the acquisition of resources and will eventually determine the ability to
acquire the necessary resources. This can be divided into:
o
: A social structure that connects a collective (group,
community, agency, organization, etc.).
: The degree of local community participation in companies
o
activities.
: When the external authority is divided among actors, the
o
expectations towards and the demand on the organisation will be many, often not
consistent and sometimes even contradictory.
t
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A
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L
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The ends for effectiveness in an ‘open model system’ are an acquisition of resources and external
support. The variables autonomy and external support are used to analyse effectiveness for this
emphasis. When there is a high level of autonomy a company does not have to depend on external
support or the other way around. When there is a low level of autonomy, a company depends much
more on external support. (Hoffer, 1995)
The vertical dimension of the diagram of Quinn and Rohrbaugh (1981) is divided into the ‘internal
process quadrant’ and the’ Human recourses emphasis’. Hoffer (1995) split up both quadrants in the
following variables. For the
(
):
I
n
-
S
e
r
n
a
l
r
p
o
e
c
s
s
q
u
a
d
r
a
n
t
b
l
u
e
c
o
l
o
u
r
e
d
: The way labour is divided within an organisation and coordination is achieved.
(Keuning & Eppink, 1979)
: The way in which in an organisation the labour is divided and
o
coordination is achieved (Jägers & Jansen, 1991)
: The written fixation of arrangements concerning the form and the
o
means for communication between organisation members (Kieser & Kubicek, 1992)
: Division of labour about components and coordination between these
components by means of the decision-making system.
How direct supervision in an organisation is executed. (Mintzberg,
o
1979)
o
Control over actions, more than over decisions. (Mintzberg,
1979)
t
r
u
t
c
r
u
e
O
r
C
o
n
f
i
g
u
r
a
g
o
F
-
t
r
a
t
n
i
a
m
i
o
s
l
a
i
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i
a
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t
n
i
a
o
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a
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r
t
n
n
:
D
i
D
e
v
i
s
i
o
n
o
f
l
a
o
b
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r
:
c
i
s
i
o
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m
a
k
i
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g
s
y
s
t
e
m
The criteria for effectiveness of the ‘internal process quadrant’ are stability and control. The formal
organisational structure represents how an organisation tries to achieve stability and control, where
the division of labour tells something about the content of the structure. The decision-making system
and the formalization stress how this formal structure works in practice and communication. (Hoffer,
1995)
18
(
H
T
h
e
u
-
a
m
n
r
e
s
o
r
u
e
c
s
e
m
p
h
a
s
i
s
o
r
a
n
e
g
c
o
l
o
u
r
e
d
) is defined by the following two variables:
: The technical system of an organization as the instruments used in the
operating core to transform inputs intro outputs. (Mintzberg, 1979)
: A set of policies, which contribute significantly to the development of a
workforce, that is skilled, flexible and motivated. (MacDuffie, 1989)
W
o
r
s
k
s
y
t
e
m
M
H
R
-
p
o
l
i
c
i
e
s
The end for effectiveness in a human resource model is the value of the human resources. The
variables account for the policies that are pursued to affect commitment and motivation of the
workforce. The work system has to match the human resource policies and the other way around.
(Hoffer, 1995)
The rational goal emphasis (
) is measured by its outcomes, which is also the key
characteristic of this model. By using Hoffer’s variables in the ‘integrated model of effectiveness’ a
picture will be created of the effectiveness in a water enterprise in Mozambique.
r
e
d
c
o
l
o
u
r
e
d
19
3.
3.1.
The case of Mozambique – From theory to reality
The Mozambiquan water system and the organization
In the next sections, the water distribution system and organization of a water enterprise in Xai-Xai
(Mozambique, see appendix 1) will be explained. In the fourth chapter, the effectiveness in such a
water enterprise will be discussed based on the Integrated model of effectiveness of Hoffer (1995).
3.1.1. Production & treatment
In Mozambique most of the raw water is surface water (97 cubic km/year) and much less ground
water (17 cubic km/year). There is an overlap of 15 cubic meters per year. Overlap is the volume of
water resources common to both surface and groundwater. Two types of exchanges create overlap:
contribution of aquifers to surface flow, and recharge of aquifers by surface run-off.
(earthtrends.wri.org, 2006) An aquifer is an underground bed or layer of permeable rock, sediment,
or soil that yields water. This leads to the following problems in Mozambique:
• 52% of the Mozambique territory is located in international river basins, and Mozambique
represents only 20% of the total area of these basins.
• More than 50% of the surface water of the country flows in at the border.
• Almost 50% of the surface water resources are concentrated in the Zambezi (international)
river basin.
These problems are more on government level and are not involved in the game, but for the water
enterprise it is rather important that the government gives priority to these problems and reaches
agreements with the ‘ripian countries’ on water sharing and integrated water resources
management. (Tauacale, 2002)
3.1.2. Quality of water
Despite huge increases in the Key Performance Indicator ‘compliance with WHO standard’ (94% now,
in Mozambique) there are also huge losses in water (Unaccounted for Water, UfW, see appendix 2),
which could mean that, except for the commercial losses, there are a lot of leakages and illegal
interceptions. This implies that the quality of the water is measured at the source and not at the end
user, because the leakages are a major threat to the quality of water. The water may be exposed to
contaminated soil and other external threats. In a warm climate together with low general hygienic
standards, this KPI implies that drinking water is not without risk. With help from government and
international organisations, the materials are of a higher quality and the losses are reduced. The
increase of quality of the source water in combination with the increase of material quality and the
decrease of losses make drinking water safer. Nevertheless, it is one of the most important factors to
increase public health and to serve the objectives of the water enterprise as well. Premazzi (1989)
mentioned: “The microbiological quality of water is of the greatest importance, and must never be
compromised.”
3.1.3. Distribution of water
UfW is one of the most serious problems in Mozambique considering this sector. Despite serious
decreases for this KPI, a lot of water continues to be spilled and not metered. As mentioned before,
the past few years the government and international organisations invested in the network and
management skills, which resulted to a decrease in UfW. On the other hand, the illegal tapping of
water is still a big problem. People sell the tapped water to others, but also dig their own public taps.
Special teams are formed to search for illegal connections and vendors to solve this problem. These
20
illegal drawers are given the opportunity to turn their illegal connection into a legal connection,
otherwise the connection will be removed. The ‘coverage’ will increase by adding connections and
public taps. Coverage is the main indicator that describe the number of people served in a certain
area. This indicator increased during the last years in Mozambique as well, but it should be pointed
out that mainly the amount of public taps is increased. One public tap serves about 500 people, but
the ‘service level’ is much lower; for example queues, distance to walk, a limited amount etc. At the
same time the ‘continuity of water’ is often far from 24 hours a day, and this could result in social
problems. This ‘continuity of water’ is an underestimated problem, for the people have to focus on
the moments when the water is available. A woman in Mozambique says: “I rather pay more for
water than having to wait for it all day. I could be earning money instead of waiting the whole time.”
Coverage is namely much easier to increase by installing public taps than by expanding the water
network. Another disadvantage for the water enterprise is that water of a public tap is cheaper than
of a network connection, because people get a discount on it. The customer with a network
connection pays indirectly for the discount on the public tap water.
S
U
C
o
l
l
e
c
t
i
C
N
C
o
o
.
n
n
:
e
v
f
i
W
n
o
O
t
f
o
e
r
c
u
t
f
a
u
i
f
s
y
i
g
t
i
e
o
(
c
e
c
y
:
m
h
n
e
/
d
r
a
s
y
)
t
a
r
t
2
0
0
60%
70%
25%
35.700
8
5
2
0
0
7
60%
90%
34%
56.800
11
2
0
0
8
50%
90%
68%
79.100
17
P
l
a
n
2
0
0
9
30%
95%
95%
112.500
24
3.1.4. Financial system
In Mozambique, the collection of water bills happen very innovative; customers can pay their bills at
agents, butthis is also possible by mobile phone, at a bank or at an ATM. This way, the enterprise try
to increase their collection efficiency. The water tariff is a big political issue in Mozambique. The
government determines the water prices. Water enterprises can only propose a water tariff. In this
proposal, a couple of different tariffs are mentioned and substantiated with arguments. The water
tariffs have to be increased every year by almost twenty percent to cover the costs and investments
in the network, but the last year it did not increase, due to upcoming elections.
3.2.
Effectiveness of a Mozambiquan water enterprise
The objectives described in the theoretical framework (chapter 2.2) are quite similar to the
objectives of a water enterprise in Mozambique. The actual objectives of the water enterprise in XaiXai (Mozambique) are described in appendix 3. In the next subchapters, the variables of the model
of Hoffer will be applied on the situation in Mozambique and linked back to the model of Quinn &
Rorhbaugh in the end of the chapter.
3.2.1. Autonomy – Open systems quadrant
Legal authority
Autonomy of an organization refers to three different areas:
-
Administrative independence
Asset ownership
Financial independence
21
A
d
i
m
n
i
s
t
r
a
t
i
v
e
i
n
d
e
p
e
n
d
e
n
e
c
Administrative independence means that nobody may interfere with the business of an organization.
It enables the company to manage itself, rather than be managed by others. The work field in the
water sector is different from other sectors. The water enterprises, also called operators, are part of
a Delegated Management Framework (DMF). The DMF is a coordinated series of bodies and legal
mechanisms in which the participation of private entities are structured in the management of the
public water supply service. There are five functional areas in the DMF:
1.
2.
3.
4.
5.
Leadership, planning, promotion and regulations
The regulatory area and guarantees for the interests of consumers
Liaison with the local authorities
Implementation, management, execution and control
Participation, consultation and extension of the DMF
The following bodies and entities are part of the DMF and related to the five functional areas:
The Minister of Public Works and Housing (1)
FIPAG (4a)
The Minister of Planning and Finance (1)
CRA (2)
The Minister of State Administration (3)
Local authorities (3 & 5)
The National Water Board (1)
Operators (4b)
The Delegated Management Coordinating Forum
(5)
As the word framework implies, the different institutes form a unity. The operators are responsible
for the management and operation of the water supply service. Important issues for the operations
and the
, which lies in the hands of other institutes
of the companies are the
within the framework. Full administrative autonomy for the water enterprises will not be realized
within the coming years, because of significant influence of decisions made by other institutes within
the Delegated Management Framework. (Van der Horn & Donker, 2006)
t
A
s
s
e
t
o
n
w
e
r
s
h
i
a
r
i
f
f
s
i
n
v
e
s
t
m
e
n
t
s
p
Assets can be defined as goods that can be used to create economic value. The operator owns part of
the goods that the water companies use to create economic value. The other part is owned by FIPAG
, assets owned by the operators
(Water Supply Asset Holding and Investment Fund).
are:
O
-
p
e
r
a
t
o
r
a
s
s
e
t
s
Assets used for operation of the water supply system (e.g. cars, motorcycles, tractors, filter
sand, pumps, radio/communication system, equipment GPS and GIS, office equipment)
House connections (water meters, pipes)
Secondary network
I
F
P
A
G
a
s
s
e
t
s
Assets owned by FIPAG comprise the required infrastructure for the operation of the water supply
system:
Pumping stations/ boreholes
Water treatment plants
Treated-water reservoirs
Raw-water pipes
Softening plants
Water towers and treated-water boosters
Production property
Office buildings and property
22
Asset ownership of the water enterprises is divided between FIPAG and the operators. Until 2011,
this is not expected to
change. Full autonomy in
asset ownership will
therefore not be realized. As
assets are used to create
economic value, the
operators need to make sure
that they have the required
assets at their disposal at
the right time. (Van der Horn
& Donker, 2006)
Sustainability
can
be defined as the ability to
cover operational costs independently with the revenues. No external funding is required for the
organization to do its daily business.
F
i
n
a
n
c
i
a
l
i
n
d
e
p
e
n
d
e
n
c
e
F
i
g
u
r
e
4
:
D
e
l
e
g
a
t
e
d
M
a
n
a
g
e
m
e
n
t
F
r
a
m
e
w
o
r
k
(
D
M
F
)
The main issue is that the revenues need to cover the operational costs. The
he water enterprises need
yearly tariff increases (19.1%), even though it is still challenging to realize the calculated revenues. It
is too ambitious to strive for fully autonomous water supply systems. Furthermore,
Furthermore, part of the assets
are owned by FIPAG, so full asset ownership will not be achieved. The operators could be financially
fully independent in its responsible area. This depends on the possibility to make agreements
agreement about
water tariff increases. The importance of striving for autonomy is that the operators need to
guarantee the sustainability of the water supply service and
and prevent the domination of sub-optimal
sub
political decisions. (Van der Horn & Donker, 2006) The main external
xternal support agencies for water
enterprises in Mozambique, like in Xai-Xai,
Xai
are:
-
African Development Bank (AfDB)
Vitens-Evides
Evides International (VEI)
Netherlands ’Development Cooperation (NDC)
Small investment programs, like ‘Water for Life’ and ‘Aqua for all’. (Van Haren, 2008)
3.2.2.
External support – Open systems quadrant
Inter-organisational context
After the prolonged civil war in 1992, the water supply network was severely deteriorated and aside
of a few investments, the first reform was made in 1998. The Government of Mozambique (GOM)
adopted a comprehensive institutional reform for the development, delivering
deliver and regulation of
urban water supply services in large cities. The new framework, known as the Delegated
Management
ent Framework (DMF), was inaugurated with the creation of two autonomous public
bodies: An asset management agency (FIPAG) with the authority to contract operators and an
independent regulator (CRA). The National Directorate of Water (DNA) in the Ministry of Public
Works and Housing (MOPH) continues to exercise policy oversight for the services. (Triche, 2009)
23
In this reform, the role of the Government of Mozambique reduces to policy-making, legislation and
regulation in order to overcome the overly centralized organization of the sector and foster
accountability, responsibility, initiative and efficiency. (Van der Horn & Donker, 2006)
After the reform initiated by the government of Mozambique, three different stages in the
management of the water systems can be identified:
1. Transitory management of the systems by FIPAG (with technical assistance).
2. Management of the systems by participation of private sector (Private Sector
Participation).
3. Management of the systems by the local authorities.
These three stages are expected to be consecutive. At the moment, the systems are managed by
FIPAG, while technical assistance is given by Vitens and can be categorized in the beginning of the
second stage (where participation lies within the private sector). The timing of the next stages
depend on the sustainability of the systems and if the municipalities are prepared to receive the
resources needed to pursue their attributes. (Van der Horn & Donker, 2006)
Community involvement
There is not a lot of useful information concerning this subject. Neither in strategic business plans nor
the narrative reports, any information is available on this subject. The most salient aspect is the
awareness campaign, in which the water enterprise want to make the people aware of the waste of
water. Together with important people from all kinds of sectors in the society (religions,
communities, villages etc.), the water enterprise set up plans and makes the leaders aware of the
waste of water and the consequences. The lack of attention in the different kinds of reports shows
the low degree of community involvement.
Expectations consistency
Strategic plans are made by the management of the water utilities and reviewed by the directors of
the mother company, the project sponsors and managers of FIPAG and VEI to avoid expectations
inconsistency among different management levels. (Van der Horn & Donker, 2006) Performance
indicators monitor the outcomes. These KPI’s are the same for every water utility, which results in a
benchmark tool. These indicators are mentioned in appendix 6. The consultation, control and
advantage in combination with the monitoring during the year(s) make(s) it very unlikely to have
large inconsistency among the expectations.
3.2.3. Structure – Internal process quadrant
Organisational chart
As mentioned in the introduction the organizational structure is typically functional in water
enterprises. Similar organisational structures appear in Mozambique. At the moment, regional
managers doubt the spam of control and the set-up of the structure. They choose to combine four
smaller cities (like Xai-Xai) to save overhead costs and consistent expectations. This results in the
following organisational charge (see figure on the next page). As can been seen it is a typical
functional structure, with the departments Production (produção), Distribution (distribuição),
Commercial (vendas) and Financial (DAF), and on top a board (direcção) with members of the
different water utilities. Here the operators work independently, but under the control of a regional
board with a large share of the asset holder FIPAG. In the implementation of the Private Sector
24
Participation it is important that the stakeholders supervise the strategic policy of the management
and the business activities and these stakeholders should advise the management. This executive
board consists of representative of FIPAG, representatives of the local authorities and the director of
the water supply systems.
Direcção
...
Projectos, política & Apoio técnico
...
Operador Chókwè
Operador Inhambane
Produção
Distribuição
Vendas
Delegado de DAF
F
i
g
u
r
e
5
:
O
r
g
a
n
i
s
a
t
i
o
DAF
Operador Maxixe
...
...
...
...
n
a
l
c
h
a
r
t
w
a
t
e
r
e
n
Operador Xai-Xai
...
...
...
...
t
e
r
p
r
i
s
e
s
s
o
u
t
h
e
r
n
r
e
g
i
o
n
o
f
M
...
...
...
...
o
z
a
m
b
i
q
u
e
FIPAG and the local authorities participate in the executive board to provide an official structure to
execute their competencies. The transfer of the competencies should be accompanied by a definition
of the role in the executive board of FIPAG, the operator and the local authorities over time. This
contributes to the successful transition to the third phase, management by the local authorities. (Van
der Horn & Donker, 2006)
Formalization
There is a high degree of formalization within the water enterprises. A reason can be found in the
inter-organisational context and the low degree of autonomy. Therefore, the operators have to keep
track of a lot of data, which eventually result in the outcomes (KPI’s, reports and financial
documents).
3.2.4. Configuration – Internal process quadrant
Division of labour
The division of labour in a water enterprise in Xai-Xai is configured in the right table and the division
of labour concerning the level of education is stated in the figure on the left:
6
o
B
a
r
d
Education level (July 2006)
W
100%
80%
60%
0
4
0
5
21
2
15
0
2
0
8
10
12
13
2
14
7
Superior
3
Tecnico Médio
14
Tecnico Basico
Secondary school (8-10)
W
Primairy school (6 -7)
17
28
20%
r
s
a
d
m
i
n
i
s
t
r
a
t
i
v
e
a
r
e
a
14
0
21
1
7
2
1
Inhambane
Maxixe
Xai-Xai
o
r
k
e
r
s
t
e
c
h
n
i
c
a
l
a
r
e
6
a
25
24
0
49
Production
Distribution
Projects / investments
Primairy School (1-5)
11
29
Chókwè
e
Secundary school (11-12)
22
0%
k
3
40%
9
r
Administration
Accounting
Commercial
HRM
3
4
15
o
Illiterate
9
T
o
t
a
l
N
o
.
o
f
e
m
p
l
o
y
e
e
1
s
Those figures illustrate the division of labour. More than 50% of the workers are working in the
25
‘operating core’, which is a similar percentage of the people who have had only a primary school
education. This situation results in a centralized decision making system (see next paragraph) and the
need for clear and dominating procedures, so called Standard Operating Procedures (SOP’s). Clear
SOP’s will save a lot of time and potential mistakes and eventually safe money.
Decision making system
In the strategic business plan of the water utilities in the southern region of Mozambique, decision
factors have been developed to construct a well thought-out decision about the possible
(de)centralisation of certain business activities.
for example water
One of the most decisive factors is whether the activity is
production, distribution and sales. Moreover, the operators consider the participation of local
entities and clients as important in its activities. Therefore, activities that are bound to a physical
location will continue to be executed decentralised. For activities that are not bound to a physical
location, it can be considered to organize it centrally. (Van der Horn & Donker, 2006) An overview of
advantages and disadvantages of (de)centralization are given in appendix 4 and the aspects that can
be centralized. The following processes need to be executed in the operating area of the water
supply systems (locally): Production process, distribution process and sales process. It appeared that
the following processes have the potential to be organized on inter-company level (centrally):
General process, project development process and general/ technical support process (Van der Horn
& Donker, 2006)
l
o
c
a
t
i
o
n
b
o
u
n
d
,
The decision-making system is highly centralized. Not only on operator level the decisions are made
centrally, but also on inter-organisational level. The operators manage the daily business
(production, distribution and sales) while the level above (FIPAG and CRA) manage the more strategic
level (general processes, investments etc.)
3.2.5. HRM-policies – Human relations quadrant
The human resource policies made a huge progression the last years and are now a key factor in the
daily business of the water companies. The company and the clients profit when employees are
motivated to apply their skills and knowledge in their daily activities. However, the operators should
have motivated, professional employees at their disposal to ensure a satisfying water supply service.
A well-organized human resource department is important to motivate the human resources. At the
moment, a human resource management plan is developed. This plan comprises the following
elements:
Salary policy
Job descriptions
Evaluation instrument
Employee development plan
Career ladder
Pension plan
Internal procedures
Collective agreement
(Van der Horn & Donker, 2006)
M
o
t
i
v
a
t
i
o
n
With the current limited size of the water supply systems, it has become a challenge to use human
resource instruments to motivate the employees. Beside the human resource department, the
management should alsoactively work on the motivation of the employees. (Van der Horn & Donker,
2006)
26
P
r
o
f
e
s
s
i
o
n
a
l
i
s
m
The current professionalism within the organizations is too low. The average education level should
be improved to stimulate professionalism and practical skills. The education level represented within
the water companies is represented in §3.2.5. It appears that less than 25% of the employees is
higher educated than secondary school. At the moment, FIPAG and Vitens pay the salaries of four of
the five educated managers on superior level or higher. The water companies themselves plan to
bear these costs in the future.
The actual education level indicates a serious limitation on attaining professionalism in the execution
of the required business activities. There are two solutions for this issue: First, to train the current
staff and second, to attract higher educated staff. An individual employee development program is
implemented in 2008, which is part of the human resource management plan. At the moment, yearly
15 percent of the employees receive knowledge and/or skill training. The technical assistance given
to the operators by FIPAG and Vitens should improve the knowledge and skills of the staff of the
operators. (Van der Horn & Donker, 2006)
3.2.6. Work system – Human relations quadrant
There is not a lot of information about the work systems within a water enterprise. The functional
setting allows only teamwork within the functional department, but mainly employees work on their
own. As mentioned above, the work system of a water utility in Mozambique is during an early stage,
but the strong focus on the development of the human resources makes people more aware, more
motivated and professional, which may eventually result in a more ‘advantaged’ HR work system.
Now it is mainly based on standardization and control.
3.2.7. Outcomes – Rational goal quadrant
The outcomes are very important in a highly
Xai Xai
centralized organisation with a strong focus on
standardization and control. All the performance
KPI
Dec.
Dec.
2008
2004
indicators are mentioned that need to be sent to the
C overage
<30
68
asset holder (FIPAG) in appendix 6. In total, this
Population served
35.700
79.200
means 113 (!) performance indicators in six different
Bact.
Water Quality
unsafe
Bact. safe
categories. (Technical indicators, Trade indicators,
Hours water supply
´4-10
16-24
Reliability and quality service indicators,
Unaccounted for Water
>60
50
Rehabilitation and extension of service indicators,
Water Metering Rate
<25
80
water quality indicators and Human resources
C ollections Rate
<75
95
indicators). The most important indicators for a
Operational cash flow
<0
30.000
water utility in a developing country are: Water
losses, coverage, continuity, water quality and collection efficiency and operational cash flow.
Detailed information about the performance indicators and which indicators are used in the
management game are stated in chapter 4 and 5.
What stands out is the number of HRM performance indicators with respect to the total number of
performance indicators. Despite the fast growing attention to the development of the human
resources, there are only two indicators in the category. These indicators only measure the number
of employees, and do not say anything about the training, development or any kind of progression at
all. Positive developments are abundant as can be noticed in the table above: Huge increases in
27
coverage, continuity, collection and metering and operational cash flow and a decrease of the UfW.
Still there is a lot to gain and this makes a water enterprise like Xai-Xai attractive to use as a sample
case.
3.2.8. Conclusion
The water enterprise in Xai-Xai is not autonomous. The Delegated Management Framework restricts
its authority. The water enterprise is not able to maintain an adequate level of net benefits and
depends highly on financial and management support of external support agencies. Lack of funds and
undereducated employees are the main reasons for failure and so the autonomy directly affects the
outcomes. The management of external funds is very important, because a lack of financial resources
put extra pressure on a deliberate distribution of the resources. This happens not only at the top
level of the DMF, but also on the water enterprise level. The various ways of control and dialogue do
not result in inconsistent expectations, which have a positive effect on the effectiveness. The
community involvement is low. People are busy with facilitating their own family and well-being. The
leaders of different communities are involved, especially in ‘water saving’ processes.
Structure and configuration were determined by centralization. Centralization tendencies were
enforced by external authorities and agencies to keep control on the financial resources and the
developments. The degree of standardization and supervision is becoming higher, more standard
operational procedures (sop’s) are developed to effectively use the abilities of the low educated
employees. There has been a strong focus on HRM the last years, which results in trainings and HR
policies. It is difficult to get high and well-educated personnel and good trainings and HR policies will
positively affect the outcomes.
The lack of autonomy is an important negative effect on the effectiveness of the water enterprise,
but the final goal of the DMF is the realization of an autonomous water enterprise. In combination
with financial and management support this had already resulted in huge progressions. As
mentioned earlier, there is still a lot to gain, important aspects what is done and needs to be
continued to be an effective water enterprise, are:
-
Customer (service) focused mission and goals.
Deliberate choice of the distribution and planning of the limited financial resources.
Development of HR policies and training (HRM)
Consultation between different functional departments
Strong focus on outcomes (control)
The findings in this chapter can be applied in the model of Quinn and Rohrbaugh (1983) as
mentioned on the next page. There is a strong rational goal emphasis, which represents
management values of structural control and external focus. The primary goals are productivity,
efficiency and profit. Despite ‘profit’ this model matches to the utmost extent with the profile
described in this chapter. Because of this, profit can be replaced with costs.
The HR policies are approaching, but still on a basic level. This human relations emphasis is on a
minimum level to make sure that the low educated employees have sufficient knowledge (by
trainings) and understand the purpose of the enterprise. The human relations emphasizes on the
development of human resources, where employees are given opportunities for autonomy and
development. The organisation is more concerned with employees than with the environment. This
is in particular not the case in water enterprises in developing countries.
28
The emphasis on the internal process model is stronger. The model primary outcome is a stable
organisational setting that maintains itself in an orderly way. This can be observed by the creation of
SOP’s, better communication systems and information systems. Despite the external focus there are
internal process emphasis present, but (still) on a basic level.
The emphasis of the Open system model is very limited. This model focuses on growth and resource
acquisition, by flexibility, readiness and a positive external evaluation. Although growth and
readiness for unexpected events are important in this context, the emphasis is not in this direction.
The growth is realized by stability and control and the readiness for unexpected events is of low.
External
Internal
The benefits of this structure (rational goal model) are that it is cheap (low costs), focuses on the
productivity and efficiency and can be handled by low-educated employees. With support of a basis
level of HRM and a supporting internal system (SOP’s, communication and information), it is possible
to work with low-educated employees to realize the primary goals. The external factors have a strong
influence on the ‘productivity and efficiency and costs’ emphasis.
F
i
g
u
r
e
6
:
C
o
m
p
e
t
i
n
g
v
a
l
u
e
s
f
r
a
m
e
w
o
r
k
(
Q
u
i
n
n
&
R
o
h
r
b
a
u
g
h
,
1
9
8
1
)
In the fifth chapter the
(effectiveness) variables indicated by Hoffer will be explained and described how to use these
aspects to be adopted in the game.
29
4. The simulation model of a water utility
4.1.
The model
The strong focus on outcomes as described in the previous chapter, is realized by using
, which are in these days a well-known management measurement tool in
water enterprises and are used all over the world. The players (the managers) have to make certain
decisions that can affect the KPI’s positively or negatively. The decisions are named ‘decision factors’
(DF’s). These DF’s and KPI’s will be discussed in this chapter.
k
p
e
r
f
o
r
m
a
n
c
e
i
n
d
i
c
a
t
o
r
e
y
s
4.1.1. The Key Performance Indicators in the game
The KPI’s are centrally stated in the game. Alegre (2006) noticed a list of benefits of the use of KPI’s.
Kaplan and Norton who set up the well-known ‘balanced scorecard’ also notice some of these
benefits. The lack of (continuous) incentives to increase effectiveness and efficiency is one of the
main reasons why a performance system is used in this sector. Also in developing countries, like
Mozambique, managers use the performance measurement system for many reasons. A
performance measurement system is a necessary tool in any company. A good system will provide
information on the current performance of the company and may even anticipate future events. The
ultimate aim of any performance assessment system is to provide information as opposed to data.
Consequently, the data collected and processed within a performance measurement system must be
related to the goals and interests of the company and its managers. A proper performance indicators
system must be understood as part of a wider entity that links objectives, strategies, critical success
factors within the company and the indicators themselves. The integration of performance
assessment within all management activities is one of the foundations of the system such as the
Balanced Scorecard (Kaplan & Norton, 1996) which aim to show that the main perspectives (financial,
customer, processes and learning & growth) within a company are interconnected and consequently
must be considered as a whole. (Alegre, et al., 2006)
“The Balanced Scorecard complements financial measures of past performance with measures of
the drivers of the future. The objectives and measures of the scorecard are derived from an
organization’s vision and strategy. The objectives and measures view organizational performance
from four perspectives: financial, customer, internal business process and learning & growth. These
four perspectives provide the framework for the balanced scorecard.” (Kaplan & Norton, 1996)
The players have to determine which objectives they want to realize (setting targets). Finally, the way
to get there has to be discussed, in other words; which initiatives will be taken to reach these
targets? This procedure needs to be done by the whole team every round to adapt changes.
There are a lot of different KPI’s. The fifteen KPI’s that have been chosen are stated in the next
chapter as well as the reasons for adopting these KPI’s.
4.1.2. The ‘Overall KPI’
The team with the highest overall KPI wins. The overall KPI is the weighted average of fifteen KPI’s.
Therefore, actually a good score on one of the KPI’s compensates a bad score on another KPI.
For example: It is not realistic that a team scores very well on all the KPI’s, except ‘Water losses’,
which they score almost 100% (everything floats away), this would make the game very unrealistic.
The solution is to introduce thresholds and be critical with relationships between different KPI’s. The
30
threshold can be a certain percentage that the player may not cross; otherwise, the player will get a
warning or is game over.
Another (very different) problem as mentioned earlier is the environmental influences in the game.
The team has to
The combination of those two problems gives a solution: Working with
focus depending on a specific scenario. In case the political focus is ‘clean drinking water for
everybody ’ the focus will be coverage & quality, but decrease of water losses and affordability is also
important. There can be many different scenarios, but it is important to be critical with the set up of
a scenario. In practice, this means that the team will get a mission. This mission depends on the
direction of the external parties. This will give the game more direction and dimension, and makes it
easier to give weight to the KPI’s as well. In one scenario, the weight of a KPI can by more than in
other scenarios. It could be that (after 5 years) the mission of the perspective of the government is
changed and there will be another focus in the game. Therefore, the scenarios give direction to the
team, make the game more dynamic and result in a solution for the ‘weight’ of a KPI.
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The focus of the first version of the game is not to determine different kinds of scenario’s, but for the
future versions of the game, it is important that there will be a(n) (easy) system to implement
different scenarios.
4.1.3. The decision factors (DF’s)
The different kinds of input in the game are the decisions the players make in the game. These
decisions have to be realistic and recognizable. Many decisions are made every day from small
operational decisions to big strategic decisions in an organisation. The game focuses on the
management level of a water enterprise for a longer period (around ten years), so the decisions will
be made on tactical and strategic level. Many decisions are made during a year and this results in the
paradox of playability and realistic simulation:
If it would be even possible to map out exactly all the
different kinds of decisions made during ten years, it would
be far too complex for the players and the game will be
unplayable. On the other hand, if there are a couple of
simplistic decisions, the game will not be realistic and it will
not be a real simulation game. It is very important to find the
right balance between these two.
Playability
Reality
By setting up ‘problem trees’ and ‘objective trees’ based on the KPI’s the decisions factors are traced.
B. Jackson (1997) mentioned that a problem tree could be used in the analysis phase of the project
design. Jackson describes two phases in his ‘logical framework approach’ two phases: 1. The analysis
phase and 2. The planning phase. This approach can be used for planning, designing, implementing
and evaluating projects. This method brings the ‘problem’ back to manageable problems. This is
necessary, because the results will be transformed into decision factors (which off course could be
affected by the players). This method is also quite easy to understand, which is important for the
communication in such a large project group and the amount of KPI’s need to be analysed.
The first step is to transform the KPI into a problem. This is quite easy, because a bad score on a
certain KPI results automatically in a problem. For example the KPI ‘Water losses’: The problem
would be ‘high physical water losses’. This will be the main problem and the next step will be to
31
search for general causes of this problem. The main cause will be ‘poor condition of the network’.
(For more information, see appendix 2.) The different causes for the poor condition of the network
are; poor maintenance & rehabilitation, poor quality of the construction and/or poor quality of the
pipes (material). This process has to be continued until concrete adjustable causes can be found, like
the lack of standard operational procedures, inadequate equipment, wrong pressure management
etc. etc. This eventually creates a problem tree that can be found in appendix 7 until 14 for the KPI’s:
Water losses, coverage, quality and continuity.
The problem tree is transformed into an objectives tree by restating the problems as objectives. ITAD
(1996) describe the objectives tree as the positive mirror image of the problem tree. The objectives
tree can also be considered as an 'ends - means' diagram. The top of the tree is the end that is
desired and the lower levels are the means to achieve the end. The transformation from problem
trees to objective trees can be found in appendix 7 until 14 for all the KPI’s. (Jackson, 2000)
This process results in a set of DF’s which all influence one or more KPI’s in the model. A distinction
can be made between the DF’s based on the functional position in the company (as in the KPI’s). This
creates a set of decisions that can be taken by every manager separately, but are all based on
financial resources. Despite that every player has his own focus (on their ‘own’ KPI’s) and goals, they
have to work together to divide the financial resources and to make sure that everybody agrees with
it. All the DF’s affects more than one KPI and most of the time the KPI’s of colleagues.
The set of 28 DF’s is very diverse and vary from operational decisions to more tactical/strategic
decisions. After a lot of discussions and adding and chafing, the following 28 DF’s are the input for
the game:
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: This decision allows the lower
households to get a fee to be able to pay for the water. It stimulates the affordability and the
amount of people can be connected in some way.
: This decision is about campaign to make people aware of the
use of water, for example waste or safety.
: In some water enterprises, there is an overload of employees and these
results in more costs and bureaucracy. I do not agree with this DF, because (if you add this
DF) you should also include ‘hire personnel’. It is also difficult to justify why an employee
needs to be fired and what the positive and negative consequences are on the long term in
an investment simulation game like this. It does not tell anything about what kind of
personnel will be fired either.
: There are many illegal connections. The detection of
these connections will result in less UfW and more legal connections, because most of the
illegal connections will be transformed into legal connections.
: The investment in this DF will stimulate people to pay for
their water bills.
: This is a geographical information system and describes a lot about the
network, for example leakages or other problems. The system is expensive and in most of
the underdeveloped regions, there is no money for a system like this.
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32
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: This DF will make it easier for costumer to pay later or in
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another way.
: Within a functional organisation with a large share of
undereducated employees, it is important to create Standard Operating Procedures. Here
employees can work more on their own and need less supervision and explanation.
: This DF creates a better
working environment for employees and can make the work more efficient.
: This DF stimulates the calibration of the meters. In developing
countries many meters are of a bad quality and do not measure the amount of water that is
actually used. This results in many commercial water losses. The calibration of the meter is
important to solve this problem.
Training program: There are different kinds of trainings for commercial managers and
employees. It creates better skilled personnel that eventually result in better results. In
appendix 5 all kind of trainings are described.
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: People that do not pay their bill only cost money. People who
do not pay their bill several times will be cut-off to save costs.
: See same point above for Commercial manager.
: See same point above for Commercial manager.
: See same point above
for Commercial manager.
: The tariff of water is very important for a water enterprise. It determines if a
water enterprise can invest in the network or other important issues. Tariffs are in most
cases a political issue and cannot be determined by the water enterprise, but are determined
by the government. When elections are coming, water tariffs will not go up.
: This decision creates a structure
whereby ‘the rich’ will pay for ‘the poor’. If you have more money you will pay more and if
you have less money, you will pay less. In Mozambique, people with a house connection pay
a standard start tariff for a certain amount of water. Even if they do not use the water, they
have to pay it as well. This way, the people who get their water from standpipes can get a
discount.
: See same point above for Commercial manager.
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: See same point above for Commercial manager.
: Water sources are the input of the water supply system.
If there is not enough water to serve the people the whole day, the sources could be scarce.
: See same point above for Commercial manager.
: Capacity of the network is not only important to serve
every person throughout the entire day, but an over capacitated network is also much more
sensible for leakages.
Frequent and accurate maintenance is very important to
avoid huge water losses and safety problems (quality of water). In developing countries,
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33
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maintenance is most often underestimated, because it does not result in clear results on the
short term and it is quite expensive.
: This DF will increase the capacity. New pumps
and production plans are examples of this DF.
c: See same point above for
Commercial manager.
: These are all kind of measures that can be taken to reduce
leakage. This can mean teams who are specialized in repairing leakages, but also ways to
address leakages (by a system or by residents).
: See same point above for Commercial manager.
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More about the formula’s and excel-model behind the game is described in appendix 15.
34
5. From reality to a simulation game
5.1.
The integration of the ‘integrated model of effectiveness’ into the
game
Most of the decisions that are made during the development of the simulation game came up during
brainstorm sessions, meetings, and interviews with experts. Experts (associate professors from IHE)
attended central meetings from Vitens International and students (University of Twente and IHE). In
the management game will be
perspective of the
discussed. When a factor of the ‘integrated model of effectiveness’ is discussed, the main pros and
cons will be summed up about how this factor is integrated in the game. The KPI’s that are adopted
in the game are stated as last (see: ‘outcomes’).
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: As described in the last chapter the water enterprise does not have a high level of
authority. If this level of authority was implemented in the game very strictly, the game would only
be on operational level. A more tactical and strategic choice has been adopted into the game This
means that the game will be played on the level of the asset holder (FIPAG) in combination with the
operational level (the water enterprise itself). The reason behind this decision is that managers
(players of the game) will get a broader understanding of what is going on at both levels. Another,
more practical, reason is that it will make the game more interesting and challenging. Besides these
decisions, the political influences are not noticeable in the game. This aspect needs to be developed
further. Examples could be: Tariff setting by the government or legislation changes.
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The focus on sustainability is not
very high in the game. The teams will get a loan (from the AfDB, for example) that needs to be
managed well. Besides this loan a relatively large amount of financial performance, indicators are
adopted in the game, including ‘cost recovery’, which is close to sustainability. The focus on
sustainability could be further developed if the game would include a financial system besides the
loan and the financial indicators. This way, the players could focus on how sustainable the
organisation is. For the first version, the use of a loan in combination with the financial performance
indicators will be enough.
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: Besides one decision factor (‘invest in water saving campaign’), there is no
attention for community involvement in the game. With respect to the learning goals (described in
the first chapter) the community involvement does not have much priority in the game. In further
developed versions, this could be more accentuated.
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v
e
m
e
n
t
.
35
: Here, the same story as described by ‘legal authority’ is applicable. In
the game, the focus is more on the customer than on the upper levels of the inter-organisational
level, like the asset holder and the government agencies. The customer is also central in the
objectives of the water enterprise. This will contribute to the interests of the external authorities and
agencies, by achieving these objectives.
+
by doing well.
I
n
t
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r
V
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N
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s
,
b
t
u
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n
d
i
r
e
t
c
: It is difficult to adopt expectation consistency (the consistency in
expectations among different levels in the organization and on inter-organisational level), because
the players work together in one team on the same management level (and not on different level
along the network). However, the expectations between the players in one team need to be
consistent. The players each have a different role and interests, but each of them to come to a joined
decision.
+
E
x
e
p
t
c
a
t
i
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n
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c
n
s
i
s
t
e
n
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y
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p
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n
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m
n
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g
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s
(
r
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t
x
n
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n
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s
)
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t
,
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t
a
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n
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.
e
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o
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(
.
v
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t
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n
c
y
)
y
)
: The players will play on the same management level divided in four
management roles: General manager, financial manager, commercial manager and operational
manager. This is not the same in every water enterprise, but the roles are clear and understandable.
Sometimes the operations are divided in production and distribution, but this has no direct
contribution to the game. It is a conscious choice to keep the functional division, because a
functional division can be found in nearly all the water enterprises. This benefits the generalizability
of the game. The lower levels in the organisational chart do not get a lot of attention in the game.
+
O
r
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g
o
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s
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,
w
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t
k
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l
(
a
r
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o
)
e
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o
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O
(
.
n
l
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o
z
n
t
a
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a
n
d
n
o
t
v
e
r
t
i
a
c
l
)
: A high degree of formalization appears in centralized organisation with a lot of
influence from government and external support agencies. This is difficult to adopt into the game,
but there are plans to increase the formalization by working with contracts and incoming paperwork
the computer game. Although it plays an important role in real life, it does not directly
connect with the learning objectives described in the first chapter of the game.
+
F
b
N
i
u
t
-
n
o
r
e
a
m
s
i
G
d
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e
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l
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o
f
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a
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a
m
l
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m
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a
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d
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a
m
n
a
e
g
r
s
.
.
: The game is on management level and the operational level is not integrated into
the game. Although the operational level functions as a large and important part of the organization
it is impossible to adopt this well (teams would be too large) and the game is more focused on
investment decisions. It could be considered to add a representative of the workers. This can be the
outsider (for example the game operator) who represents the workers and comes along when
decisions are made (or will be made) where the employees are involved.
+
D
i
v
i
s
i
o
n
o
l
f
a
o
b
r
u
’
e
D
w
o
r
i
c
k
i
s
n
i
g
o
n
e
a
f
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v
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c
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n
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m
a
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n
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a
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d
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p
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e
e
s
(
t
r
a
i
n
i
n
g
,
S
O
P
s
,
)
36
’
-
I
E
f
e
f
t
c
s
a
r
e
n
o
t
e
m
a
s
r
u
e
d
i
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t
e
h
K
e
,
P
x
e
c
t
p
o
f
r
s
‘
t
a
f
s
f
a
t
i
s
a
f
t
c
i
o
n
.
’
N
o
r
‘
e
a
l
r
e
r
p
e
s
e
n
t
a
t
i
v
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o
t
f
e
h
o
w
r
e
k
r
s
: The decisions are made centrally; this is also the case in the game. In the
, but in the newer
first version, the decision making ‘stops’ at the level described by
versions ‘unexpected events’ will happen that are dedicated from high level, like a decline of the
tariff raise. The financial, commercial and operational managers receive all their own KPI’s to care for
and their own interest. It is the task of the general manager to manage his team and come up with
shared solutions and budgets. The general manager is also the one who receives the information and
it is his task to communicate this information well. This information could be the mission, goals and
focus of the game and the virtual water enterprise, but also the unexpected events described above.
+
e
D
i
c
s
i
o
n
a
m
i
k
n
s
g
s
y
t
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n
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o
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e
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p
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r
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.
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e
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o
)
r
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r
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S
(
.
e
e
a
p
r
a
r
g
a
p
a
h
o
b
v
e
)
: Like in the water enterprise in Xai-Xai many KPI’s are measured, but no KPI’s within
HRM perspective. The HR function is mainly adopted in de decision factors of the game, (like training,
SOP’s, work environment), but the only KPI is ‘staff satisfaction’. As mentioned before, most of the
employees work on operational level and most of the people are undereducated. This is an
important aspect to mention, because these employees have to execute the decisions made on
management level. If these people do not have the right knowledge and/or they are not satisfied, the
execution could become in danger. This could have negative effects on (other) important KPI’s like
water losses of customer complaints. Although there is attention for HRM, the effects are not well
measured in the game and in real life as well. Performance indicators could be, besides the staff
satisfaction; the “total training”: (hours/employee/year): Number of training hours per employee
and year. (Alegre, et al., 2006)
+
M
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R
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p
l
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s
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f
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T
(
a
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a
f
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n
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a
a
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s
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n
.
s
t
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d
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r
a
t
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r
e
: No real focus on work systems, because the game is focused on
customers and is played on management level of a water enterprise. Work systems are important in
the water enterprises, but do not fit well into the game. Maybe in future versions this could be
adopted to make a more complete simulation game on different levels. Work systems are important
because the organisation is focused on productivity, efficiency and costs. These work systems
contribute to the primary objectives and make it easier to deal with lower educated employees.
Work systems are a way of realization of stability and control. They are important, but there is no
solution to implement this into the game.
t
o
t
N
r
a
n
o
s
a
t
o
f
t
e
r
n
i
m
t
i
o
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s
w
i
o
n
t
r
k
r
o
o
s
y
t
u
s
t
e
p
m
t
u
;
s
f
)
u
r
t
h
e
r
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e
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r
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h
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s
n
e
e
d
e
d
t
o
i
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v
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s
t
i
g
a
t
e
h
o
w
t
o
i
m
p
l
e
m
e
n
t
t
h
i
s
w
e
l
l
.
: There is a strong focus on KPI’s. The KPI’s measure the result of the decisions, and these
KPI’s can be compared with other teams. This is also the way to give direction to the game. In Xai-Xai,
113 performance indicators are measured. This would be too much for a simulation game. The game
would become too messy and unclear for the players were the focus would be. Eventually 15 KPI’s
came up after a lot of meeting and discussion. The exact meaning of the KPI’s and why the KPI’s are
chosen, is described below. Every manager has four KPI’s except for the general manager who has to
O
u
t
c
o
m
e
s
37
manage his team. It was quite difficult to get a good set of KPI’s, because KPI can be nuanced. For
example, the KPI ‘coverage’ can be split up in people who has a house connection or people that life
in an area with a standpipe. In perspective of the playability of the game as well as the development
of the game, we have chosen for a basic set op KPI’s, for the following reasons:
G
e
n
e
1.
r
a
l
m
a
n
a
g
e
:
r
Gross Fixed Assets-water (€/ W pop served): Total gross fixed assets per
population served for water (W). (IBNET.org): the general manager has to keep an eye on the
asset value of the water enterprise to prevent the neglecting of the most valuable aspect of
the enterprise. A decrease of the value (despite all the investments) would mean a
dilapidation of the assets (network, pumps etc.).
2.
Percentage (%) of the loan used: Actually this is the ‘money meter’. It tells
how much money is available to make the decisions. Most of the money for development in
this sector is made available by a loan. That is why there is chosen for ‘loan’ except for
‘budget’.
3.
A measure of how happy workers are with their job and working
environment. (%): The only KPI that measures HR aspects. In water enterprise like Xai-Xai the
most important daily task of the general manager is to motivate, control and help the
employees.
A
s
o
L
i
n
t
a
4.
e
t
a
S
F
s
n
a
n
V
f
c
i
a
t
u
s
f
a
l
i
l
a
l
i
t
-
a
z
i
m
e
u
s
t
a
f
a
i
n
o
n
t
c
a
g
-
i
e
o
n
-
:
r
A ratio used to measure a company's ability to recover operating costs from
annual revenue. This ratio is calculated by taking the company's total annual expenses
(excluding depreciation and debt-related expenses) and dividing it by the annual gross
income. (investopedia.com): The Working ratio, operating ratio and full cost recovery ratio
(described below) are too much of the same. They all tell something about the costs with
respect to the incomes. By other KPI’s (like coverage’), these kinds of nuances are not made.
Only cost recovery will be enough to tell something about how the costs are compared to the
incomes.
5.
Operating cost coverage ratio (-): Ratio between the total revenues and
running costs. (Alegre, et al., 2006): Idem
6.
Total cost coverage ratio (-): Ratio between the total revenues and
the total costs. (Alegre, et al., 2006): It can tell something about how sustainable a water
enterprise is and this is important with respect to the autonomy of the water enterprise.
Current ratio (-): Ratio between current assets and current liabilities. (Alegre, et
7.
al., 2006): This financial indicator is more focus on the assets in combination with the
liabilities. As described in the second chapter; the assets are where it is all about in a water
enterprise, without good assets, a good service level is impossible.
W
o
O
C
m
l
u
a
r
l
s
m
i
k
e
p
F
o
r
t
o
c
r
c
i
s
r
r
g
a
h
e
n
n
t
r
g
t
r
a
t
i
a
a
i
l
o
-
a
e
t
o
c
o
i
i
o
v
-
e
r
r
y
a
t
i
o
-
-
m
a
n
a
g
e
:
r
C
8.
Non-revenue water by cost (%): Percentage of the
system input volume that corresponds to the valuation of non-revenue water components.
(Alegre, et al., 2006): This KPI measures the water that is not paid. This can be for several
reasons, for example bad/no metering or administrative mistakes. This KPI and the KPI ‘water
C
o
m
m
e
r
c
i
a
l
N
o
n
-
R
e
v
e
n
u
e
W
a
t
e
r
(
N
R
W
)
-
38
losses’ are together the indicator Unaccounted for water (UfW) and cannot be together more
than 100% of course.
Service complaints per connection (No. complaints/1000
9.
connection/year): Average number of complaints of quality of service per 1000 service
connections and per year. This indicator is adequate for distribution systems. (Alegre, et al.,
2006): Describes how the customers value the service level created by the water enterprise.
Annual water bill for a household consuming 6m3 of water per month
10.
through a household or shared yard tap (but excluding the use of stand posts) (IBNET.org):
An important indicator; although people have different opinions about the right of water, it
needs to be paid somehow. If the tariff is too low it effects the operations of the water
enterprise (low maintenance, low quality etc.), but if the tariff is too high it is not affordable
for many people. In reality, the water enterprise can only propose a tariff and the
government eventually decide. The indicator is important, but this important political effect
needs to be made clearer in the game.
Cash income / Billed revenue as a % (IBNET.org): This indicator focuses
11.
on how the enterprise will receive the money for the water consumed. It needs to find ways
to collect the money and to stimulate people to pay the bill (by them self). If a water
enterprise wants to be more autonomous in the future, this is an important indicator.
N
u
A
f
C
o
m
m
o
f
o
l
r
l
m
e
b
d
e
e
r
a
c
i
i
o
a
f
i
b
t
c
r
o
l
c
i
t
n
l
f
m
a
t
o
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s
u
n
i
c
a
g
e
m
t
f
i
f
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a
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r
n
e
i
c
r
r
f
y
c
s
f
o
m
p
l
a
i
n
t
s
-
-
-
:
C
12.
Apparent losses (%): Percentage of the water provided to the system (system
input volume minus exported water) that corresponds to apparent losses. This indicator is
adequate for urban distribution systems. (Alegre, et al., 2006): Water losses are a big
problem. In developing countries, UfW is more than 50%. This is not only a problem for the
water enterprise (financial losses), but it tells something about the condition of the network
as well. This could result in the pollution of water and illegal tapping. These indicators
(including the other operational indicators below) have extra weight in the game, because
they directly influence the service level of the customer and thus the goals of the water
enterprise.
Continuity of supply (%): Percentage of hours when the (intermittent supply)
13.
system is pressurized. (Alegre, et al., 2006): Where the water losses tell something about the
condition of the network, the continuity tells more about the capacity of the network. It can
have economic and social consequences (described earlier) for the customer if there is no
water during a part of the day. This indicator influences the service level also directly.
14.
Tests carried out (%): Percentage of the total number of treated water tests
performed that comply with the applicable standards or legislation. (Alegre, et al., 2006):
Very important for public health and can cause major problems if the drinking water is not of
a sufficient quality. Quality of water in Western Europe is something else than quality of
water in Mozambique or other developing countries (even in Western Europe this is
different), in the game it is not well stated what quality really means (in the game itself).
Households and businesses supply coverage (%): Percentage of households and
businesses that are connected to the public network. (Alegre, et al., 2006): Like all the three
indicators described above this is also a very important indicator. It reflects the amount of
people in a certain area that have access to water. This can be a house connection or a
standpipe. A negative point is that it does not distinguish both options, this because it is a
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39
major difference in the service level to the customers.
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The results and future plans
The result is a so-called 1.0 version of the water management game, which needed to be tested
many times. The testing sessions were highly needed, because there were no references or any kind
of information that can ensure a good model in the first place. The whole model and the game are
tested by trial-and-error. The game is played many times with students from the IHE, people from
Vitens and specialists to create a realistic, but also, an instructive game. The game is now used for
learning purposes. For example it is adopted in courses at UNESCO-IHE.
This is the first working version of the game and during the creation of the game participants came
up with many ideas. Many ideas are not integrated in the game; this does not mean that they are not
important. However, it is important to keep them in mind and use them for the development of
future versions of the game. Sometimes the ideas fit well with the recommendations that are given
in the next chapter and sometimes it is used to make the game more attractive.
-
-
-
-
-
(Information/email) inbox for the general manager (working with warning/information
messages) – To stimulate the general manager to communicate well with his colleagues and
give him some kind of information power’.
Doing proposals for tariffs (so ‘the government’ can decide if they accept it or decline it) – In
real life the water enterprise cannot decide to raise the tariffs, but the government can. This
is quite essential to make the game more realistic and teaches players how to set up
proposals for tariff setting.
Game over (being fired) during the game when ignoring the warnings and performing badly.
– It will put more pressure on the game and it integrates in a small sense the power of higher
parties (asset holder or government). This will result in a more realistic level of autonomy.
Nuance KPI’s/DF (coverage intro connections and standpipes, quality of water etc.)
Adapting the information database & the historical statistics of other players into the game –
The team can play against team that played the game earlier. This creates possibilities to play
against teams in other countries and its increases the competitive character of the game (by
different kind of rankings).
Different currencies – To get the sense of the value of money for players all over the world.
More languages or a translation tool – To make it understandable for everybody in world.
Introducing ‘publicity’ into the game – Kind of a rewarding tool if you are doing well – If you
are doing well or something popular you will published in virtual papers or TV-programs as a
kind of reward.
40
-
-
-
Unexpected events/disasters and other external effects – The deal with crisis management or
reconstruction management a disaster can occur so that the game will totally be shaken up.
Scale differences, play with different scale of companies – In scale of the water enterprise
varies from thousands to a couple of millions. This creates scale of economy and other
advantages and disadvantages. It gives a new look on the game and will make the game more
realistic and instructive.
Website with results of the games played and other information – This is for publicity and
creates more competition between teams in different countries or regions.
The players choose their own KPI’s – This results in a lot more freedom of strategic focus and
will need more cooperation between the team members. In gives the game another
dimension, but it has huge practical consequences, because it is very difficult to integrate in
the game and it will make it much more difficult to compare with other teams.
The possibility to play it in different counties (at the same time) – This will connect people all
over the world with the same interests and will make the game more dynamic. This could
eventually result in perspectives of different cultures towards water supply.
Some ideas are more difficult to adopt than others and it depends on financial resources and the
success of the game to what extent the game will be extended. At the moment, it is an attractive, but
quite basic game where managers can invest in certain decisions and can see the results. The
interactive part of the game is set outside the computer game and needs to be stimulated by an
external teacher of operator.
A screenshot of the actual game can be found in Appendix 17. On the top, the role of the manager is
stated and the timeline of the game. The grey dot represents the current round (or year). In the left
box, the KPI’s are stated which are linked to the role of the managers. When the players clicks on the
decisions-button, the player can check all the decisions made by all the players of the team.
In the overview, the player can read all the result of the decisions the player has made in the last four
rounds. Underneath the overview the scenario is stated which gives the player leads to make the
right decision. When the player wants to know more about the scenario, the player can consult the
document files. On the bottom of the page, the team composition is stated which gives the link to
the other team players and their results.
41
6. Conclusion & recommendations
6.1.
Conclusions
A water enterprise is a special kind of business. The key element of this unique character is the
product what they sell: Water. Hoffer (1995) mentioned that many people consider water as a free
commodity, where Moslem societies even intend that water is a religious right and Socialists intend
that this social commodity have to be provided free from charge. In the end the customer is the one
where the costs are originated and this needs to be paid either direct or indirect (taxes). Hence,
water should be considered as an economic good, where the customer provides costs. These tariffs
are most of the time a political issue, where politicians use the water tariff to attract and keep voters.
(Hoffer, 1995) Addressing water as an economic good does not mean that water enterprises are
profit-focused; the opposite is true. Water enterprises are not seen as profit organisations, but as
non-profit organisations. Daft stated that non-profit managers are committed to customers with
limited funds, must keep the organisational costs as low as possible and demonstrate a highly
efficient use of resources. Non-profit organisations do not have a ‘financial’ conventional bottomline, which creates another problem: Managers often struggle with the question of what constitutes
organizational effectiveness. Daft (2007) describes effectiveness as “the degree up to which
contemplated objectives are achieved”. Quinn and Rohrbaugh (1983) set up the ‘competing values
framework’ to analyze organizational effectiveness and discover two major dimensions underlying
of the organization and the
conceptions of effectiveness: The
, which result in four quadrants. Hoffer (1995) translated these four
and split up the quadrants into variables that are
quadrants into an
more concrete and applied for water enterprises.
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A typical general organizational objective of a water enterprise is:
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The application of the Integrated Model of Effectiveness results in an organisation that
prefers stability and control and with a mainly external focus. Stability and control is characterized by
a high degree of formalization, a functional organisational structure, a high degree of
standardization. A low degree of autonomy and sustainability results also in control from external
and government parties and the need for stability. This external focus is not only on interorganisation level, the customers play a very important role as well.
e
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”
.
This external focus and stability & control are adopted into a model for a management simulation
game, where managers can make investment decisions that influences the performance of a water
enterprise. Using different kinds of Key Performance Indicators, the control is simulated. The KPI’s,
even as the decisions that can be made in the game are selected in a way that it gives a all-round and
good presentation of a water enterprise in a development country with the focus on realizing a good
service level for customers. Of course, there are some critical points, but these will be mentioned in
the recommendations in the next chapter, and it is important to keep in mind that this is the first
version of the game. The interactive part ‘outside’ the computer game should result in a discussions,
agreements and good communication between the players (managers). By this way, the managers
can learn from each other, work together towards the general objective, and create a better
understanding of the different kind of facets within a water enterprise and a better understanding of
the job of colleagues. These expectations connect well with the learning goals that are set up in the
starting phase of the game creation.
42
6.2.
Recommendations
As mentioned in the conclusion there are always things that could be improved. It is split up into
three categories: The model behind the game, the development process of the game for next
versions and general recommendations.
o
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Further research on
aspects in the game – The political and other external
influences are not that strongly presented in the game as they are in real life. Very basal
aspects like water tariff are now determined by the water enterprise.
Further research on the
aspects in the game – Despite that there are some DF’s that
focus on the operational level of the organisation, there is no attention to what the effect is
of these DF’s on the KPI’s regarding HRM. This is striking, because there is a large operational
part with a low education level in the enterprise. How to handle these employees can have
huge effects on the performance of the firm.
– An aspect that is not well handled in the
Further research on
development of the model. More attention to this aspect can maybe enrich the game.
Further research on
between different DF’s and relations between different KPI’s. –
The game is based on the principle that a certain DF influences a certain KPI in a certain way.
There is paid no real attention to the fact that DF can mutually influence each other. For
example: If the players invest in ‘leakage detection program’ and not in ‘maintenance’, it is
not realistic that the KPI ‘Water losses’ decreases. Further research has to make clear what
the critical relations are between the DF’s and this is the same story for the KPI’s.
a KPI. - Effects in the effects. In this model, the
Further research on the way a DF
effect on the KPI and the amount of money you invest is proportional. This means that the
higher the investment, the higher the effect will be in the same proportion. This is not
obvious, because sometime a small investment results in huge benefits and sometimes you
need to invest a lot of money to reach any effect at all.
– Some decision factors are very doubtful or unclear. To be
Review the
critical towards the DF’s it will make the game more understandable and playable, for
example ‘firing employees’.
can be nuanced. – In some cases the KPI’s are to general, for
Review on how the
example ‘quality of water’ and ‘service coverage’, this does not give a realistic picture of
what kind of decisions a manager faces in a water enterprise.
•
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:
It is important to keep in mind that the first stage of the developing process is very
important. Define very well what the scope is for the new version and who is responsible for
which part. Especially when you work with groups, of different interests, a leader is very
important and everybody needs to one who that is. Leadership is important to keep
everybody focused and informed. More about the development process of the first version
of the game in the reflection (next chapter).
•
G
e
P
r
a
l
:
43
Use the prototype version for learning purposes, not directly to learn from the game, but to
learn to make game better. The first version can be instructive and can learn the basics of the
decision-making in a water enterprise, but is even more instructive to be critical towards the
game. This way, the student will also learn a lot about the practice of water supply.
•
6.3.
Reflection
Overall, it was a very instructive and challenging experience to create the model for a simulation
game. I learned a lot in various dimensions; to function in a mixed project team, the organisation and
system behind water supply, writing a paper about it and about cultural differences between
development en developing countries, not only on water supply level.
The development of a simulation game in this sector was a very new idea and had never been done
before. It was also new for the parties involved. The different interest, priorities and distance
sometimes caused some problems with the concordance between the team members. This resulted
in misunderstandings or topics that were discussed repeatedly. This did not cause social friction
between the team members, but resulted in time losses and losing interest in the development.
From my point of view, this was all caused by a willingness to start as soon as possible with the
project. Here, the focus of the game was not clear and tasks and especially leadership was poorly
defined. Good communication and leadership is necessary to make the game successful with many
different parties all over the country. This lack of leadership and focus resulted especially in the
beginning for a lot of time losses and pointless discussions. Eventually people who stand up, take
leadership, by narrowing down the team, and by time pressure solve this. I have often (especially in
the beginning) doubted the fact to take more leadership, but the people around me had much more
experience and knowledge about this sector, so from my point of view this was not my role. I do not
blame anyone, but a more targeted focus, clearer roles and leadership and a more structured way of
communication would have helped a lot. The ironic part is that this is exactly what we want to learn
the players in the game. To work together with people in other fields and create a targeted focus,
which eventually results benefits for the ‘customer’. I mentioned this ironic part when I went to
Mozambique. Many people where working hard to build up the country. Water supply is essential in
this process and with a lot of financial and management support from different parties (including
Vitens), the achieved huge progress the last years. I realised that it was somewhat arrogant to set up
a game to learn managers how to manage in these companies. Of course, they can use the
experience of managers from foreign countries with a longer history in water supply, but to solve this
with a game was a utopia. Now it is used as a learning tool for students at UNESO-IHE and this is the
best place for a game like this, I think. It would be great if it connects students all over the world and
get a better understanding of water supply in the future. The concrete things I learned from this
bachelor assignment are:
- Make better agreements about guidance and the practical issues.
- Create a clear demarcation of the research and targeted research questions.
- Ask and be more critical about the state of affairs.
- Do not combine too much things at the same time, but focus on what is important.
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44
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i
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d
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e
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e
s
Premazzi, G. (1989). Scientific assessment of the EC standards for drinking water quality.
.
C
e
n
t
r
e
C
o
m
i
m
s
s
i
o
n
o
t
f
e
h
E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
R
e
s
e
a
r
c
h
s
Quinn, R. E., & Rohrbaugh, J. (1981). A competing values approach to organizational effectiveness.
.
P
u
b
l
i
c
P
r
o
d
u
c
t
i
v
i
t
y
R
e
v
i
e
w
45
Tauacale, F. (2002).
(Kenya): Eduardo Mondlane University.
W
Triche, T. (2009).
a
t
e
r
r
e
s
o
r
u
e
c
s
o
o
a
z
m
q
i
b
e
u
a
"
n
d
t
e
h
s
i
t
a
t
u
i
o
n
o
t
f
e
h
s
M
a
h
l
e
a
g
t
e
r
e
d
M
d
a
n
a
e
g
e
m
n
t
o
U
f
r
a
b
W
n
a
t
e
r
S
u
p
l
p
S
y
e
r
v
i
e
c
r
i
v
r
s
"
.
I
Z
s
e
M
I
e
D
Nairobi
M
f
N
A
O
Q
B
U
E
A
C
;
S
E
I
S
U
T
O
Y
D
F
F
&
G
A
P
C
A
R
.
Tulsian, P. C., & Tulsian, S. D. (2000).
Sagar P. Ltd.
UNESCO-IHE Annual Report. (2008).
I
I
C
S
E
C
o
m
e
m
I
U
N
E
S
Van der Horn, P., & Donker, A. J. (2006).
C
O
r
i
c
a
l
a
n
d
s
t
d
u
o
z
a
m
q
i
b
e
u
)
S
;
e
r
v
i
e
c
a
Van Haren, A. (2008).
X
p
e
p
n
d
i
3
x
4
.
S
;
t
A
E
i
-
a
i
;
N
a
r
r
a
t
i
v
e
r
e
n
n
p
l
a
u
l
r
e
o
p
r
n
d
r
o
b
World Bank. (1990).
r
a
t
l
b
i
c
r
P
i
v
a
t
e
a
P
r
t
n
t
e
e
r
i
g
e
r
t
a
J
n
a
u
r
-
y
e
D
e
c
m
e
b
a
p
l
p
i
a
c
t
i
o
n
Delhi: Ratna
X
s
.
Delft.
.
s
u
p
i
y
n
C
o
h
k
B
c
s
u
i
n
e
s
s
l
P
a
n
e
w
X
n
,
a
h
m
a
b
n
e
a
,
i
x
e
x
a
n
X
d
a
i
-
a
i
Xai-Xai: FIPAG & Vitens.
.
s
i
h
W
;
p
a
r
2
0
0
7
t
e
r
s
u
p
l
p
o
k
o
f
r
i
f
n
a
n
i
c
a
v
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l
u
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t
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o
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r
e
s
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l
l
i
p
t
i
y
n
C
o
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k
e
w
n
,
a
h
m
t
e
n
s
-
n
t
e
r
r
i
n
i
c
s
o
f
l
p
9
8
e
s
a
n
8
.
n
b
a
n
e
,
a
x
i
x
e
a
n
d
Maputo: FIPAG & Vitens.
.
I
V
1
E
d
M
a
a
t
i
o
n
a
A
l
n
n
u
H
a
n
M
u
Vitens-Evides Annual Report. (2007).
WHO. (1990).
t
a
I
P
o
p
s
I
W
X
a
e
H
-
M
(
i
d
m
e
t
h
o
d
s
.
a
l
R
e
p
o
r
t
2
0
0
7
.
Utrecht: VEI.
Geneva: WHO.
World Bank.
46
Appendix 1: Map Mozambique
47
Appendix 2: Unaccounted for water
Production
losses
Raw water
transport
Treatment
Distribution network leakages &
commercial losses
Distribution
Billing & collection
Technical losses
Commercial losses
•
•
•
•
Production losses
Distribution network
Deficient collection
Deficient billing
•
•
•
Illegal connections
No water meter
Inaccurate water meter
48
Appendix 3: Vision and goals
A vision is a shared and ambitious image of the future defining the ambition and direction of the company. A
vision is what the company will be in 5 years time.
According to the management, the
“
W
h
l
e
a
e
s
s
s
f
a
m
a
a
w
e
o
t
u
t
t
t
g
n
i
h
a
v
t
a
c
d
b
t
e
r
o
i
n
e
o
e
d
a
s
g
a
t
t
n
s
h
r
d
o
e
e
l
p
v
b
o
o
n
a
r
f
e
i
f
p
i
l
e
e
r
o
e
n
b
m
w
s
r
a
a
s
t
m
a
t
i
o
n
i
o
n
e
n
i
t
e
i
r
a
u
s
l
n
p
m
a
a
s
u
e
s
t
o
n
d
i
m
p
p
a
l
l
y
o
d
s
b
s
y
m
i
g
y
e
i
i
n
o
s
e
a
e
e
t
s
n
e
h
o
n
e
e
o
c
e
r
t
m
,
t
g
f
n
a
c
o
p
t
n
e
i
c
g
c
n
a
u
t
o
,
i
e
r
s
w
h
i
e
y
is:
y
y
k
b
n
,
l
a
d
a
o
u
m
s
p
m
r
n
e
o
n
c
s
t
i
r
e
h
e
c
h
i
e
f
a
f
c
s
i
l
s
c
i
e
i
e
p
e
n
r
s
i
n
t
e
t
t
s
p
s
r
c
u
a
a
s
n
e
o
d
v
e
e
d
o
p
f
u
r
o
r
a
g
f
e
i
b
t
l
i
t
c
h
e
,
s
c
o
a
i
n
f
v
s
g
u
e
s
e
t
r
e
n
u
t
e
r
s
s
e
a
t
,
r
,
i
a
l
s
”
To realise these challenging objectives, an integral approach is required, which is supported by all employees.
The vision covers the following objectives:
-
Reliable water supply service
Prepared for the future
Motivated and professional employees
Continuous increase of coverage
Cover costs of operations and maintenance
Efficient use of assets
Due regard to environment
Recognised by clients and public in general
Reliable
In the previous paragraph 3.1 about the mission was described how the operators define reliability and how
they want to achieve this.
Prepared for the future
The organizations must be prepared for the future. With the organization of the activities, human resources
and assets, it should be able to easily adapt to changes of the internal and external context. The solution is a
close collaboration of the different water supply systems. In this way, it should be possible to attract higher
educated staff that can work for the four cities, while the salary costs are shared. For continuation of the daily
business, the operators and clients will not depend on a single employee. Furthermore, it also creates more
space for employees to make a career within the organization, which means retaining valuable skills and
knowledge within the organization. Moreover, a legal entity of significant size is better able to raise funds for
improving service level to the clients and cope with financial risks. This means improved financial capacity.
Motivated and professional employees
The human resources are a key factor in the daily business of the water companies. Clients and the company
itself profit when employees are motivated to apply their skills and knowledge in their daily activities. To
ensure a satisfying water supply service, the operators should have, beside motivated also, professional
employees at their disposal. Human resource instruments will be implemented to motivate the staff. Training
the staff and hiring well-educated staff is planned to improve the professionalism.
Continuous increase of coverage
The water supply in Mozambique is characterised by low coverage. This situation contributes to poor health
conditions and a general degradation of the quality of life, in particular for the poor population. One of the
objectives of the National Water Policy is; increasing coverage of water supply, particularly for rural and lowincome groups. The operators share this objective. They consider the creation of additional connections as
their social responsibility and a way to improve the financial sustainability of the company. The planning is an
49
increase of at least 50% of connections for the water supply systems in the four cities until 2011. An important
issue in the current situation is that the operators have difficulty to meet the population growth with the
creation of new connections. Additional investments are required to significantly improve the coverage.
Furthermore, the definition of the population in the service area and units used to calculate population served
need to be reconsidered.
Covering costs of operations and maintenance
The National Water Policy (1995) promotes full cost recovery in the sector and simultaneously the recognition
of water as an economic as well as a social good. It must be clear that there is a tension between full cost
recovery and the social role of the water supply services. Significant investments are required to fulfil the social
role, while revenues hardly cover salary and energy costs. Currently, the operators are heavily depending on
FIPAG and other donors to cover investment costs and even some operational costs. In the scope of the
business plan, a periodic correction of the tariffs is required to cover the cost of operations and maintenance.
Efficient use of assets
Considering the social value the water supply systems can generate in society, operational excellence should be
taken seriously by the operators. Water should be recognised as an economic as well as a social good. The
operator should strive for a continuous supply of good quality water for a fair price, which is accompanied by
good customer service. This implies an efficient use of resources, which can be attained by cost control. Several
cost categories offer good opportunities for benchmarking. Moreover, the organisation should actively capture
the opportunities to generate additional income.
Due regard to environment
The interfaces between the business activities of the water supply services and the environment are the use of
the scarce resource water, contamination and energy consumption. In 2007, FIPAG and Vitens will develop an
environmental management plan.
Recognised by clients and public in general
The operators want to be recognized by their clients and the public in general for the way they fulfil their
primary function;
. Key topics in the image
that the operators at least should send out are: reliability of the service, safety of the water, justness of the
water price. Other topics can be communicated for certain business reasons. The message being
communicated depends on the objective of the specific situation and target group.
c
o
n
t
r
i
b
u
t
e
t
o
t
h
e
w
e
l
l
b
e
i
n
g
o
f
t
h
e
p
o
p
u
l
a
t
i
o
n
i
n
t
h
e
i
r
s
e
r
v
i
c
e
a
r
e
a
s
Autonomous
For the scope of the business plan, it is too ambitious to strive for fully autonomous water supply systems.
Therefore, it is not incorporated in the vision. The operators function in a framework, which means that they
will experience influence of the other institutes in the framework in the administration of the organizations.
Furthermore, part of the assets is owned by FIPAG, so full asset ownership will not be achieved. The operators
could be financially fully independent in its responsible area. This depends on the possibility to make an
agreement on (yearly) tariff increases. The importance of striving for autonomy is that the operators need to
guarantee the sustainability of the water supply service and prevent the domination of sub optimal political
decisions. A more detailed explanation is given in annex A.
50
Appendix 4: (de)centralization (dis)advantages
e
n
t
r
a
l
i
a
z
t
i
o
(Van der Horn & Donker, 2006)
n
C
Advantages
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
D
e
c
e
Disadvantages
1.
Hiring and developing people
2.
Use of assets and human resources
3.
Negotiation position
4.
Acquisition of external funds
5.
Investment barriers
6.
Financial risks
Cross subsidization
Knowledge exchange
Standardisation of procedures
Addition of new water supply systems
(Van der Horn & Donker, 2006)
n
t
r
a
l
i
a
z
t
i
o
Communication costs
Transport costs
Flexibility in organizational change
Discharging people
Interpersonal relationships
Dilution of responsibilities
n
Advantages
Disadvantages
1. Organizational flexibility
2. Knowledge of the water supply systems
3. Internal communication
1. Negotiation position
2. Investment barriers
3. Financial risks
4. Cross subsidization
5. Knowledge exchange
6. Standardisation of procedures
7. Autonomy
8. Susceptibility for fraud
(Van der Horn & Donker, 2006)
In a seminar with the management of the organisations appeared that the following activities could
be centralized:
P
o
s
s
i
b
i
l
i
t
i
e
s
f
o
r
c
e
n
t
r
a
l
i
z
a
t
i
o
n
.
-
Drafting policy and solving policy issues for all business processes can be centralised
Developing strategic policy
Marketing and Public Relations activities (excl. carrying campaigns)
Recruiting and human resource management
Managing financial and economic affairs (excl. Administering and managing the ledger,
Operating the accounts payable system, Administering projects and assets, Cash, bank
and giro administration)
Maintenance of boreholes
Maintenance of water meters
Managing water abstraction & water protection areas
Water quality analysis
Computerisation and automation (excl. Operational maintenance and management of
existing office automation systems for data processing and data storage)
Procurement
Dealing with legal issues
Retirement of staff
-
Project development and realisation (excl. execution and supervision of projects)
-
-
51
Appendix 5: Training content
FIPAG HEAD OFFICE
OTHER TRAINING INSTITUTIONS IN
MOZAMBIQUE
Diploma in Project Planning and
Management
Customer Services Management
TRAINING INSTITUTE FOR WATER AND
SANITATION (CFPAS) IN MOZAMBIQUE
Leadership
Network construction
Public Relations ( PR)
TRAINING INSTITUTE FOR WATER AND
SANITATION (CFPAS) IN MOZAMBIQUE
Electricity
OUTPUTS
Improved standards of customer services, enhancement Characteristics of service; How to improve the service level?; Creating
a customer-driven organization; Approaches to Customer Care;
and maintenance of close relationship with the
customers and increase the competitiveness of the water Negotiation skills; Effective communication; Best Practices in
Customer service programme; Measuring customer needs and sa
company
DRINKING WATER COMPANIES OF CHÓKWÈ, XAI-XAI, INHAMBANE AND MAXIXE
OUTPUTS
Improved management skills for the management
Improved know-how and skills to ensure proper
performance of corrective and preventive maintenance of
water supply networks, as well as to assure the transfer
of skills in the preparation of situation reports about the
problems taking place in the network
Improved organizational communication by enhancing
corporate image, identity and personality as well as
social responsibility. Improved internal communication
system in order to have a more customer centred
approach with the public.
OUTPUTS
Acquired knowledge of the techniques in electricity
Operation and Maintenance of Electrical
Pumps
Acquired knowledge of concepts, techniques and models
of HR management as well as the development of proper
policies for HR development.
Acquired knowledge of maintenance of electric pumps of
the water supply systems and efficient use.
Maintenance and reparation of
Hydromecanic Equipment
Acquired knowledge to maintain the water supply
systems secure, operational and efficient.
Management of Small Water Systems
Knowledge for an efficient and effective water supply
service in Small Water Sistems
Secretary
Acquired know-how about the role of a secretary within an
organization as well as the planning and organization of
tasks, filing and correspondence management.
Customer Services
Improved service level and increased capacity to identify
the needs of the customers
Human Resources (HR)
OTHER TRAINING INSTITUTIONS IN
MOZAMBIQUE
OUTPUTS
Word, Excel
Basic knowledge of Word and Excel
Commercial software (PHC)
Improved knowledge of commercial software
Commercial software advanced (PHC)
Improved knowledge of commercial advanced software
TRAINING ABROAD
CONTENTS
OUTPUTS
General Management (higher level)
Improved management skills for the directors
Training in water company South Africa
Improve know-how about working procedures and
manners, by exchange of experiences.
CONTENTS
The role of the leader; The development of leadership styles in
organizations; Individual and group motivation; Results and objectives
for individuals and groups; How to conduct a meeting; Processes of
problem analysis and decision-making.
Design of network, the use of different types of materials; construction
of connections; testing of networks; curving of galvanized pipe; repair
and maintenance of valves and taps.
Historical overview of PR; definition of PR; the functions of PR
(communicative, management and interpretative, etc.); distinguish PR
from advertising and propaganda; develop and execute PR plans and
campaigns for water companies.
CONTENTS
Electric energy and the effects of electric current; utilize materials;
Electric component; Continuous current and alternating current;
Electronic components; Transformers and motors; Three- phase
systems, Power electronics and digital electronic; Safety
Core competences; Policies of HR management, Recruitment and
selection, analyse and description of functions, Career Planning,
performance evaluation and administration of salaries
Operations, maintenance and reparation of electrical water pumps,
diagnose breakdown of water pumps, operation correctly.
Operations, maintenance and repair of water pumps and electric
control panels, maintenance of different types of valves, cleaning and
disinfections of water deposits.
Operation and maintenance of small water sistems, Financial and
commercial organization and management; different kind of modalities
of management and perspectives; planning and analysis of
performance indicators.
The secretarial function in the company; Communication; Develop
skills of personal and telephone contact; Organization of work, time
management and information management; Organization and
management of files
Customer relations management, Structure of conversations with
Customers, Resolve complaints, Communication skills as feedback
and non verbal communication, Etiquette, Communication Problems
CONTENTS
Word: Introduction to word processors; Presentation of word
2000;Creation and editing documents; Functions and tools of word
2000; management of documents and tables, Printing documents.
Excel: Introduction to spreadsheets; Presentation of Excel 2000;Crea
Customer services (contracts and complaints), execution of billing
procedure (pre - billing analyse); management of debits (clients
notice, desconnections, reconnections), executions of collection
process; report analyse.
Control of the commercial system, control of results, analyse of query;
the use of database; introduce corrective actions;
CONTENTS
The role of the leader; The development of leadership styles in
organizations; Individual and group motivation; Results and objectives
for individuals and groups; How to conduct a meeting; Processes of
problem analysis and decision-making.
Training depends on personal needs of worker in technical,
commercial or management areas. The practical training is focused
on the application of theoretical knowledge in water companies.
Performance Indicators and Result-based
Result based management
Management
Relationship between logical framework and indicators; results based
management and development of project indicators; Measurement of
performance and data collection; Indicators and monitoring.
Project Design: Identification, Preparation
and Assessment
Project preparation context; Need of analysis and project description;
Financial and economic analysis; Logical framework and definition of
indicators.
Implementation of a systematic and logical approach in
projects design
52
Appendix 6: Performance indicators Xai-Xai- 2008
E
P
I
T
R
F
N
E
F
R
O
C
R
O
H
M
M
N
A
A
I
C
N
I
T
A
L
E
C
O
I
I
R
N
N
D
I
D
N
E
C
I
Q
A
E
U
T
A
C
O
S
R
R
O
T
T
E
S
X
A
I
-
X
A
I
-
2
0
0
8
D
U
n
i
t
s
J
u
l
y
2
0
0
8
T
o
t
a
l
A
v
e
r
a
g
e
S
Volume of water abstracted
m3
280.915
2959280
328808,9
Volume of Water Treated
m3
280.010
2897591
321954,6
Volume of water distributed
m3
258.501
2733548
303727,6
Losses in water treatment
%
0%
0,020846
0,020846
Technical losses (Treatment, Transmission Center &
Distributor)
%
8%
0,076279
0,076279
Small Systems
m3
24.593
Total production
m3
304.603
3120232
346692,5
Consumption of electricity (Production)
KWh
144.099
1142070
163152,9
Consumption of electricity (distribution center)
KWh
0
0
Consumption of electricity per m3 of water abstracted
kwh/m3
0,51
0,385928
0,385928
Consumption of electricity per m3 of water distributed
kwh/m3
0,00
0,417798
0,417798
Total energy consumed
Kwh
144.099
1142070
163152,9
Total energy consumed per m3 of treated water
kwh/m3
0,51
0,394145
0,394145
Calcium hypochlorite (HTH)
Kg
110
1361
151,2222
Calcium hypochlorite (HTH)
g/m3
0,39
0,4697
0,4697
Gaseous Chlorine
Kg
0,00
Gaseous Chlorine
g/m3
0,00
Aluminum Sulphate
Kg
0,00
Aluminum Sulphate
g/m3
0,00
Consumption of chemicals
53
Lime
Kg
0,00
Lime
g/m3
0,00
Illegal connections regularized
no
0
0
0
New Links
no
264
1423
158,1111
Links deactivated
no
0
0
0
Cut Links
no
98
783
87
Number of religações
no
35
302
33,55556
Domestic connections
no
6.212
52945
5882,778
Institutional links (public)
no
153
1321
146,7778
Trade links
no
103
899
99,88889
Industrial Links
no
6
52
5,777778
Fontenários
no
60
464
25
Total number of connections and active legal
no
6.534
55681
6186,778
No. of connections billed based on the reading of the
meter
no
5.320
43057
4784,111
Percentage of connections billed based on actual
readings
%
81%
0,77328
0,77328
m3
115.706
1128504
125389,3
Institutional links
m3
9.481
114066
12674
Business Links
m3
3.899
46392
5154,667
Industrial Links
m3
408
4269
474,3333
Fontenários
m3
4.763
45318,38
5035,375
R
T
A
D
E
I
D
N
I
A
C
T
O
R
S
Total active connections by legal categories
i
B
V
L
l
o
i
l
i
l
n
n
g
u
k
m
s
b
e
h
o
m
i
l
l
e
d
e
54
Total
m3
134.257
1338549
148727,7
Not invoiced water (UFW)
%
52%
0,538048
0,538048
Volume invoiced based on actual reading of meters
m3
99.676
1032056
114672,9
Average volume per active connection invoiced
m3
21
24,03961
24,03961
Average volume charged for the domestic active
m3
19
21,31465
21,31465
%
52%
Billing ratio
I
A
n
v
o
i
c
e
v
a
l
u
e
Links home
10^3 Mzm
1.357.355
1369538
8
1521710
Institutional links
10^3 Mzm
6.932
1240524
137836
Business Links
10^3 Mzm
66.856
787431
87492,33
Industrial Links
10^3 Mzm
160.840
746100
82900
Fontenários
10^3 Mzm
24.520
274405
30489,44
Total
10^3 Mzm
1.616.503
1674384
8
1860428
Canceled or revised billing
10^3 Mzm
40.469
155188
12932,33
Actual invoice
10^3 Mzm
1.576.034
1658866
0
1843184
Average turnover by binding legal
MZM
247.399
300710,3
300710,3
Average household bill by binding legal
MZM
218.505
258672
258672
Links home
10^3 Mzm
1.356.953
1249627
6
1388475
Institutional links
10^3 Mzm
8.786
1075371
119485,7
Business Links
10^3 Mzm
86.505
790867
87874,11
Industrial Links
10^3 Mzm
193.598
564716
62746,22
Fontenários
10^3 Mzm
14.494
185515
20612,78
Total
10^3 Mzm
1.660.336
1511274
5
1679194
m
o
u
n
t
C
h
a
r
g
e
d
55
Ratio (MTS)
C
h
a
r
g
e
V
d
o
l
u
m
R
0,902585
0,902585
e
Links home
m3
106.591
972470
108052,2
Institutional links
m3
461
55322
6146,889
Business Links
m3
4.514
41574
4619,333
Industrial Links
m3
10.161
29651
3294,556
Fontenários
m3
1.860
18448
2049,778
Total
m3
123.587
1117465
124162,8
92%
0,834833
0,834833
Ratio (m3)
R
103%
E
L
I
A
I
B
L
I
T
A
Y
D
N
Q
A
U
L
I
T
F
O
Y
E
S
V
R
I
E
C
S
Production Hours per day
hrs/day
19
154
17,11111
Average number of hours per day distribution
hrs/day
20
153
17
Number average of the whole system
hrs/day
20
159
17,66667
Interruptions in the system caused by lack of electricity
hrs/day
12,0
192
21,33333
Interruptions in the system caused by other reasons
hrs/day
45,0
257
28,55556
Total hours of interruption in the system
hrs/day
57,0
449
49,88889
Average number of days to respond to new
connections
day
15
135
15
Average number of days between entry of the
complaint and the response to the client (claimant) by
the operator
day
15
135
15
Number of complaints
no
79
1111
123,4444
Returns the adductor
no
3
16
1,777778
Repairs on the network
no
0
256
32
Repair service in branches
no
133
1047
116,3333
E
H
A
B
I
L
I
T
A
T
I
O
N
A
N
D
E
X
T
E
N
S
I
O
N
O
F
S
E
R
V
I
C
E
S
56
W
Number of repairs electromechanical
no
0
0
0
Length of the adductor
Km
0
0
0
Length of network
Km
0
0
0
Length of branches
Km
65
556,81
61,86778
Number of rapações by 100 km of the adductor
no
0
0
Number of rapações by 100 km of network
no
0
0
Number of rapações by 100 km of feeder lines
no
204
1592,335
176,9261
Replacement of pipes
m
0
0
0
New links
no
264
1423
158,1111
Substitution of links
m
56
358
39,77778
Substiuição of fontenarios or repair
no
0
19
2,111111
Meters Replaced
no
0
22
2,444444
Hydrants replaced
no
0
0
0
Parameters required for testing
no
3
27
3
Parameters required microbilológicos
no
2
18
2
Parameters not required microbilológicos
no
12
86
9,555556
Parameters tested
no
0
103
11,44444
Microbiological parameters tested
no
0
13
1,444444
Microbiological parameters not tested
no
90
11,25
Total samples
no
36
238
26,44444
Total samples collected in the production
no
17
104
11,55556
Total samples in Centros Distributor
no
19
134
14,88889
Total samples that do not meet the standardized
parameters
no
14
48
5,333333
Total% of samples that do not meet the standardized
parameters
%
39%
0,201681
0,201681
Total production in the samples that do not meet the
no
0
6
0,666667
A
T
E
R
Q
U
A
L
I
T
Y
57
standardized parameters
Total% of samples in production that do not meet the
standardized parameters
%
0%
0,057692
0,057692
Number of samples collected in Centers Distributors
and are not in accordance with the standardized
parameters
no
19
126
14
% Of samples collected in the Centers Distributors and
are not in accordance with the standardized
parameters
%
100%
0,940299
0,940299
Parameters required
no
0
0
0
Parameters tested
no
0
0
0
Total number of employees
no
107
963
107
Total number of employees per 1000 connections
no
16
17,29495
1,921661
Raw water
I
N
D
I
C
A
T
O
R
S
D
H
U
M
A
N
R
E
S
O
U
R
C
E
S
58
59
Appendix 7: Problem Tree – Physical water losses
Problem Tree – Physical Water Losses
Physical water losses
(% of water lost in the
distribution system)
Poor condition of
network
Poor Maintenance
and rehabilitation
Insufficient
inspections
Lack of funds
Lack of staff
Inadequate SOP’s
Lack of material,
spares and fittings
Lack/inadequate
equipement
Poor quality of
construction
Poor workmanship
No/Defect
(leaking) detection
Inadequate
pumping system
Too high pressure
Lack of equipment
Wrong pressure
management
Poor quality of
pipes
Inadequate
Design &
construction
procedures
Lack of staff
Poor workmanship
in construction
Corrosion of pipes
Poor supervision
of works
Poor quality of
local pipes
To old network
60
Objective Tree – Physical Water Losses
Appendix 8: Objective tree - Physical water losses
Physical water losses
(% of water lost in the
distribution system)
Good condition of
network
Good
Maintenance and
rehabilitation
Sufficient
inspections
Sufficient staff
Sufficient funds
Adequate SOP’s
Good quality of
construction
Sufficient material,
spares and fittings
Sufficient /
Adequate
equipement
Good
workmanship
Normal pressure
Inadequate
pumping system
Goog (leaking)
detection
Good quality of
pipes
Adequate Design
& construction
procedures
Sufficient
equipment
No corrosion of
pipes
New network
Good quality of
local pipes
Wrong pressure
management
Sufficient staff
New managers
(personel)
Realize M&O
procedures
Invest in
increasing
maintenance
Purchase good
leak detectors
Invest in
equipment
Training program
workers
Good
workmanship in
construction
Invest in
distibution
capacity
Pressure
management
system
Leakage detection
program
Realize Design &
Construction
procedures
Select pipes of
good quality
Replacement
investment in
distribution
network
Good supervision
of works
Training program
managers
61
Problem Tree – Service Coverage
Low Service
Coverage
(% of population in
service covered)
(High) Total
population in the
service area
Low Total # of
connections
Appendix 9: Problem tree – Service coverage
Low # of existing
House
Connections (HC)*
Low Available
budget for new
facilities
Low Investment
budget
High material
costs
Far away from
main mains
Low # of excisting
Public Taps (PT)*
Low # of new
kiosks
High cost to make
a new facilities
Low # of new HC
Low # of new PT
Low abIlity
Low willingness
Not attractive
pricing
Low degree of
trust in water
quality
Low # of main
mains
# of population
influx
Inadequate pricing
rates
No/low
Connection fee
Poor quality of
water
High labour costs
High overhead
cost
Low Level of
sudsidy
See ‘Complaince
with standards’
Inefficient work
High salary
* times the people served by PT or HC (estimated)
Population growth
Wrong perseption
of the company
and water
# of existing
population
# of population
exit
62
Problem Tree – Service Coverage
High Service
Coverage
(% of population in
service covered)
High total # of
connections
Appendix 10: Objective tree – Service coverage
Low # of existing
House
Connections (HC)*
Low # of excisting
Public Taps (PT)*
Normal material
costs
Compensation for
living far away
from main mains
Invest in extension
distribution
network
High # of new
kiosks
Normal cost to
make a new
facilities
Available budget
for new facilities
Investment budget
Total population in
the service area
High # of new HC
High # of new PT
High abIlity
High willingness
Attractive pricing
High degree of
trust in water
quality
High # of main
mains
# of population
influx
Connection fee
Good quality of
water
Normal labour
costs
Normal overhead
cost
Good Level of
sudsidy
See ‘Complaince
with standards’
Efficient work
Normal salary
Decrease loans
* times the people served by PT or HC (estimated)
Set adequate
pricing rates
Lobbying
government
Right perseption
of the company
and water
Promotion
campaign
# of existing
population
# of population
exit
EXTERNAL
Adequate pricing
rates
Training program
workers
Population growth
63
Problem Tree – Continuity of service
Appendix 11: Problem tree – Continuity of service
‘Low level of’
Continuity of service
(hours water per
day)
Availability
shortage
No/ not many
sources
High demand
Big events
Low trariffs
Poor condition of
network
Seasonal shortage
‘Dry area’
No funds to
search for new
sources
Poor condition of
operational
equipment/
conditions
Inadequate
system capacity
See Physical
water losses
Inadequate
distribution
capacity
Inadequate
production
capacity
Low storage in
reservoirs
Low # of pipes
Inadequate source
capacity
Externalities
Quality change
Insufficient funds
Quantity change
Too old
technology an
equipment
Lack of O&M
Inadequate
abstraction
capacity
Poor
management&
operations (M&O)
Lack of SOP’s
Lack of funds
Lack of O&M skills
Lack of staff
Lack of
supervision during
implementation
Lack ofequipment,
tools and spares
Lack of
information
Lack of foreigne
currency fund
Some unsuitable
equipment for
local conditions
No plan for
maintenance
Unsuitable
imported
equipment
No O&M plan
Inadequate
preventive
maintenance
Poor O&M
manuals
Poor knowlegde of
need of spare
parts for imported
equipment
Improper
installation
Lack of local
products
Lack of tools and
maintenance
facilities
Lack of knowlegde
of importance of
preventive
maintenance
No regular
maintenance
programmes
64
Objective Tree – Continuity of service
‘High level of’
Continuity of service
(hours water per
day)
Appendix 12: Objective tree – Continuity of service
No Availability
shortage
Good condition of
network
High demand
Big events
Sufficient sources
Seasonal shortage
See Physical
water losses
Adequate
distribution
capacity
Adequate
production
capacity
Low storage in
reservoirs
Sufficient # of
pipes
Adequate source
capacity
Externalities
Normal tariffs
‘Dry area’
Good condition of
operational
equipment/
conditions
Adequate system
capacity
Sufficient funds
Sufficient funds to
search for new
sources
Quality change
Quantity change
Adequate SOP’s
Sufficient staff
EXTERNAL
Awareness
campaign
Invest in additional
sources
Lobbying
government
Invest in
increasing
production
capacity
Set up O&M
procedures
Adequate
abstraction
capacity
Good
management&
operations (M&O)
Higher tariffs
Good planning
Adequate
technology an
equipment
Good O&M
More managers
(personel)
Sufficient funds
Plan for
maintenance
Sufficient
equipment, tools
and spares
Good O&M skills
Suitable
equipment for
local conditions
Adequate
information
Suitable imported
equipment
Proper installation
Training program
workers
O&M plan
Adequate
preventive
maintenance
Good O&M
manuals
Good supervision
during
implementation
Good foreigne
currency fund
Knowlegde of
need of spare
parts for imported
equipment
Good local
products
Sufficient tools
and maintenance
facilities
Kknowlegde of
importance of
preventive
maintenance
Good regular
maintenance
programmes
Training program
managers
Invest in
equipment
Training program
workers
Stimultate local
interperneurship
Invest in
equipment
Training program
managers
Set up M&O
procedures
65
Appendix 13: Problem tree – Compliance with standards
Problem Tree – Compliance with standards
Compliance with
standards
(% of water quality
tests complying to
standards.)
Poor quality tap
water
Poor distribution
system
Too long
residence time
Inproper storage
reservoirs
Poor quality
laboratory work
Poor abstraction/
treatment
Infected by
leakages (see
Physical water
losses)
Poor quality of
water in flow
Poor quality of raw
water
Inadequate water
treatment
Poor equipment
Inadequate
procedures
Lack of
management
Wrong
outsourcing
company
Failure Analysis
Failure Sampling
Lack of SOP’s
Lack of HRD
Unclear
Inadequate
system design
Inadequate design
of the process
Poor management
en operations
(M&O)
Lack of SOP’s
Lack of
management
Lack of MSF
66
Appendix 14: Objective tree – Compliance with standards
Objective tree – Compliance with standards
Compliance with
standards
(% of water quality
tests complying to
standards.)
Good quality tap
water
Good distribution
system
Normal residence
time
Proper storage
reservoirs
Good quality
laboratory work
Good abstraction/
treatment
Not Infected by
leakages (see
Physical water
losses)
Poor quality of
water in flow
Good quality of
raw water
Adequate water
treatment
Good equipment
Adequate
procedures
Good m&o
Right outsourcing
company
Good analysis
Good sampling
Adequate SOP’s
Good HRD
Set up O&M
procedures
Set up O&M
procedures
Set up O&M
procedures
Training program
managers
Unclear
Adequate system
design
EXTERNAL
Adequate design
of the process
Good
management en
operations (M&O)
Invest in
equipment
These three can become one
Replacement
investment
distribution
network
Investment in
increasing
distribution
capacity
Replacement
investment in
production
facilities
Adequate SOP’s
Good
management
Lack of MSF
Set up O&M
procedures
Training program
managers
Invest in
equipment
Select/reorganize
good outsourcing
company
Appendix 15: The Matrix-model behind the game
The determined KPI’s and decision factors can be visualized in a matrix, where all the relationships
between the DF’s and KPI’s are expressed. The matrix is shown in appendix 15. Horizontally the KPI’s
are expressed and vertically the DF’s. In the first version only the relationships are visible, but to
make a usable matrix to extract formula’s out of it, this is far from useful. Three important variables
need to be determined first:
1) The size of the effect of the DF on the KPI.
2) The range in which a decision can be taken.
3) The timing of the effect of the DF on the KPI.
1. There is no literature of the exact influences of certain decision on certain KPI’s. The only way to
determine this influence is approximate this influence by experts of the IHE and VEI. The following
step will be taken to test it comprehensively by ‘trial and error’. As mentioned in §3.1.1. most of the
KPI are in percentages, which can be decomposed in (a lot of) different variables. To work with that
amount of different variables is impossible and does not have added value for the model. We choose
to keep the percentages of the KPI’s and determine the way the DF’s influences this KPI.
The first step will be the estimation of the
effect that a certain DF can have on a certain
KPI. In other words: If you invest the maximum amount stated for this DF (see point 2) than the
effect will be on his positive maximum.
The second step will be the estimation of the minimum effect that a certain DF can have on a certain
KPI. In other words: If you invest the minimum amount stated for this DF (means investing nothing at
all) than there will be a negative effect on the KPI’s (or there will be no effect if the DF does not
(negatively) affect the KPI).
Between these extremes, there will be a sliding scale of the effect.
m
a
x
i
m
u
m
2. This scale is determined by the range in which a decision can be taken. In other words, the
maximum amount of money that has to be invested to reach the maximum effect. The minimum is
always zero, but the maximum needs to be estimated using information from the water enterprise in
Mozambique.
3. The last point is the timing of the effect. It’s possible that effects are directly noticeable (within
one year = one round), but also over a longer period (over a couple of years/rounds). In addition, this
effect can be gradually evolving or can be abrupt.
The sum of all the decisions (also when there is no action) on a certain KPI will be the total effect of
the DF”s on the KPI. This applies for every KPI, so 15 times. In the following, picture this calculation
process in virtualized of one DF on one KPI. Where the first stage is the investment of the team
(€1.100.000), this result in an effect (of 0.065 = 6,5%) which will be realized over three years (every
year a positive effect of almost 2.2%). The sums of all the (positive and negative) effects together
67
result in a total effect on the certain KPI (0.075) and realize a new KPI (for the new round) of 44, 5%.
T
h
e
f
o
r
m
u
l
a
’
s
:
The formula’s can be found in the appendix 16. They are formulated as the way described and
pictured in the previous paragraph and are linear. The ‘new’ KPI will be calculated on the KPI of
previous rounds plus the effects of the decisions made in that round. To avoid huge ups and downs in
the KPI’s it is only possible to affect the range that could be improved. For example: If the KPI ‘Service
coverage’ is 70% is only possible to affect the 30% that is left to develop. In addition, this range can
decrease the KPI. In that way, there are no big fluctuations. Another advantage is that it is easier to
increase a KPI that is performing badly and it is much more difficult to increase a KPI that is almost
perfect, which is similar in reality. For water utilities it is much easier (if they have the financial
resources) to increase coverage from 40% to 50% than increase coverage from 98% to 100%.
Furthermore, the minimum and maximum effects are adopted in the formula as well as the time
factor and the maximum amount that can be invested.
68
Appendix 16: The Matrix
e
r
o
f
r
m
a
c
e
i
n
i
d
c
a
t
o
r
(
s
G
e
Possible decisions
n
Connection fee reduction for lower income households
=
Customer awareness campaign
Fire personnel
=
Illegal connections detection program
Implement a customer caring service
Increase no of bill collectors
Customer GIS system
Increase flexibility of bill payments
Invest in adequate SOP’s
Invest in office, computer hard- and software, technology, etc Meter calibration program
Training program
Cutoff non paying customers
=
Fire personnel
=
Invest in adequate SOP’s
Invest in other office, computer hard- and software, technology,- etc
Increase tariff
=
Tariff structure set to cross-subsidize poor hh
=
Training program (HRD)
Fire staff
=
Invest in additional (w ater) sources
Invest in adequate SOP’s
Invest in distribution network capacity
Invest in increasing maintenance
Invest in increasing water production capacity
Invest in office, computer hard- and software, technology)
Leakage reduction program
Training program (HRD)
# of positive and negative effects
maximum effect (cumulative effect of positives)
maximum investment
STARTING KPI (CHOKWE) in %
i
n
a
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
n
c
i
Decision
maker
F/C/O
C
C
C
C
C
C
C
C
C
C
C
C
F
F
F
F
F
F
F
O
O
O
O
O
O
O
O
O
a
l
p
e
r
f
o
r
m
a
n
c
e
i
n
a
l
m
d
Possible decisions
i
c
a
t
o
r
s
(
F
i
n
a
n
a
g
e
r
)
General Performance Indicators
1)Asset value
2)Loan utilization
3)Staff satisfaction
Effect
Effect
Effect
Timing
Size
Size
Timing
Size
Timing
min max 1st full
min max 1st full
min max 1st full
=
=
=
+
=
=
=
=
=
+
=
=
=
=
=
+
=
=
=
=
+
=
+
+
+
+
=
=
8
=
=
=
=
=
=
=
21
200
100
100
100
200
10
300
10
100
200
400
100
10
100
100
200
10
10
100
200
1000
200
1000
100
1000
300
300
200
0
0
0
0
-33
200
0
1
-33
200
0
1
-5
1000
0
1
-2 1000
0
0
-5 1000
-33 300
0
0
0
0
1
0
1
1
0
0
0
0
0
0
0
-200
-100
-100
-100
-200
-10
-300
0
0
0
0
0
0
0
0
-100
-200
-400
-100
-10
-100
-100
-200
0
0
0
0
0
0
0
0
0
0
-100
-200
-1000
-200
-1000
-100
-1000
-300
-300
-200
## 3700
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
-6620
a
n
c
i
a
l
m
a
n
a
g
e
r
=
=
=
=
=
=
=
+
+
=
+
=
+
+
=
=
+
=
+
=
=
=
+
=
+
12
0
-0.1
0
1
0
0
0.05
0.1
0
0
1
1
0
0.05
0
1
0
0
0
-0.1
0.05
0.1
0
0
0
1
1
1
0
0
0.05
-0.2
0
0
1
1
0
0.1
0
1
0
0.2
0
1
0
0.1
0
1
0
0.8
)
cost of decision
4)Working ratio
Effect
Size
Timing
min
max 1st full
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
6650
indication
F
r
Connection fee reduction for lower income households
=
Customer aw areness campaign
Fire personnel
=
Illegal connections detection program
Implement a customer caring service
Increase no of bill collectors
Customer GIS system
Increase flexibility of bill payments
Invest in adequate SOP’s
Invest in office, computer hard- and softw are, technology, etc Meter calibration program
Training program
Cutoff non paying customers
=
Fire personnel
=
Invest in adequate SOP’s
Invest in other office, computer hard- and software, technology,- etc
Increase tariff
=
Tariff structure set to cross-subsidize poor hh
=
Training program (HRD)
Fire staff
=
Invest in additional (water) sources
Invest in adequate SOP’s
Invest in distribution netw ork capacity
Invest in increasing maintenance
Invest in increasing w ater production capacity
Invest in office, computer hard- and softw are, technology)
Leakage reduction program
Training program (HRD)
# of positive and negative effects
maximum effect (cumulative effect of positives)
maximum investment
STARTING KPI (CHOKWE) in %
200
100
100
100
200
10
300
10
100
200
400
100
10
100
100
200
10
10
100
200
1000
200
1000
100
1000
300
300
200
6650
=
+
+
+
+
+
=
+
+
+
+
+
26
Financial Performance Indicators
5)Operating ratio
6)Full cost recovery ratio
Effect
Effect
Size
Timing
Size
Timing
min
max 1st full
min
max 1st full
effect
F/C/O
C
C
C
C
C
C
C
C
C
C
C
C
F
F
F
F
F
F
F
O
O
O
O
O
O
O
O
O
e
cost of decision
indication
Decision
maker
n
0
0
0
0
0
0
0
0
0
0
0
-0.02
0
0
0
0
0
0
-0.02
0
0
0
0
-0.03
0
0
0
-0.05
-0.1
0
0.15
0.05
-0.05
-0.15
-0.15
0.08
0.2
-0.01
0.1
0.1
0
0.1
0.15
-0.03
0.5
-0.1
0.1
0.25
-0.1
0.25
-0.1
-0.1
-0.1
-0.05
0.2
0.25
-0.12
0
1.44
100
40%
0
0
1
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
1
0
0
0
0
0
0
0
0
3
0
2
1
5
1
1
2
3
1
2
3
0
2
3
1
1
1
3
2
10
2
10
2
10
1
1
3
=
+
+
+
+
+
=
+
+
+
+
+
26
0
0
0
0
0
0
0
0
0
0
0
-0.01
0
0
0
0
0
0
-0.01
0
0
0
0
-0.02
0
0
0
-0.04
-0.07
0
0.1
0.04
-0.03
-0.1
-0.1
0.06
0.15
-0.06
0.05
0.08
0
0.07
0.1
-0.2
0.4
-0.08
0.08
0.2
-0.3
0.2
-0.3
-0.08
-0.3
-0.03
0.15
0.2
-0.1
0
0.23
100
60%
0
0
1
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
1
0
0
0
0
0
0
0
0
3
0
2
1
1
1
1
2
3
1
2
3
0
2
3
1
1
1
3
2
10
2
10
2
10
1
1
3
=
+
+
+
+
+
=
+
+
+
+
+
26
7)Cash ratio
Effect
Size
Timing
min max 1st full
effect
p
effect
l
effect
a
effect
r
effect
e
effect
n
value (0-1000
units)
e
value (01000
units)
G
0
0
0
0
0
0
0
0
0
0
0
-0.01
0
0
0
0
0
0
-0.01
0
0
0
0
-0.01
0
0
0
-0.02
-0.05
0
0.05
0.03
-0.02
-0.05
-0.05
0.04
0.1
-0.08
0.02
0.06
0
0.03
0.05
-0.01
0.3
-0.06
0.06
0.15
-0.5
0.15
-0.5
-0.06
-0.5
-0.1
0.1
0.22
-0.1
0
-0.62
100
30%
0
0
1
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
1
0
0
0
0
0
0
0
0
3
0
2
1
1
1
1
2
3
1
2
3
0
2
3
1
1
1
3
2
10
2
10
2
10
1
1
3
+
+
+
+
+
+
=
+
+
+
+
+
27
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-0.05
-0.05
0.1
0.05
-0.15
0.1
-0.15
0.05
0.05
-0.15
0.05
-0.1
0
-0.1
0.1
-0.15
0.4
-0.2
-0.1
0.15
-0.3
0.15
-0.3
-0.35
-0.3
-0.15
-0.2
-0.15
0
0
-1.75
100
80%
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
1
1
1
1
2
3
1
2
1
0
1
1
3
2
1
1
1
1
1
1
1
1
3
1
1
69
o
m
m
e
r
c
i
a
l
p
e
r
o
f
r
m
a
n
c
e
i
n
i
d
c
a
t
o
r
(
s
o
m
m
r
c
i
cost of decision
a
l
m
a
n
a
g
e
r
)
t
i
o
n
a
l
Decision
maker
p
e
r
f
o
r
m
a
n
c
e
i
n
d
i
c
a
t
o
r
s
(
p
e
0
1
0
0.15
0
1
0
0.15
0
2
0
0
0
-0.02
-0.02
0.1
0.15
0.15
0.1
0.25
0
0
0
0
0
3
1
2
2
1
0
0
-0.3
0.08
0
0
1
1
-0.04
+
+
=
+
=
+
+
+
+
+
+
=
=
=
+
=
+
+
+
+
+
+
+
+
22
0.88
r
a
t
i
o
n
a
=
=
200
100
100
=
+
=
-
100
=
200
10
300
10
100
200
400
100
10
100
100
200
10
10
100
200
=
=
+
=
=
=
=
=
=
=
=
=
=
=
=
-
1
2
3
4
Connection fee reduction for low er income households
Customer awareness campaign
Fire personnel
Illegal connections detection program
C
C
C
C
C
C
C
C
F
F
F
F
F
F
F
O
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Implement a customer caring service
Increase no of bill collectors
Customer GIS system
Increase flexibility of bill payments
Invest in adequate SOP’s
Invest in office, computer hard- and softw are, technology, etc Meter calibration program
Training program
Cutoff non paying customers
=
Fire personnel
=
Invest in adequate SOP’s
Invest in other office, computer hard- and software, technology,- etc
Increase tariff
=
Tariff structure set to cross-subsidize poor hh
=
Training program (HRD)
Fire staff
=
l
m
a
n
a
g
e
r
-0.1
0
0.2
0
0
0
1
0
0
-0.2
0
1
# Invest in additional (water) sources
-
1000
=
22
23
24
25
26
-
200
1000
100
1000
300
+
+
+
=
+
0
0
-0.2
0.2
0.2
0.2
0
1
0
1
3
1
0
0.2
0
1
-
300
200
+
+
9
0
-0.1
0.4
0.2
1
0
2
1
-0
0
1.6
100
57%
O
O
# Leakage reduction program
28 Training program (HRD)
# of positive and negative effects
maximum effect (cumulative effect of positives only)
maximum investment
STARTING KPI (CHOKWE) in %
0
0.15
0
2
0
0
0
0
0
-0.02
0
0.1
0.15
0.1
0.12
0.1
0.1
-0.3
0
0
0
0
0
0
0
2
1
3
1
2
2
1
0
0
-0.4
0.1
0
0
1
1
0
0
0
0
-0.1
0
0
-0.01
-0.02
0.05
0.05
0.03
0.1
0.1
0.1
0.05
0.1
0.05
0
1
0
1
0
1
0
1
0
1
3
1
3
1
3
1
2
1
+
=
=
=
=
=
=
+
=
=
=
=
=
=
=
=
+
=
=
=
=
=
=
=
=
=
=
4
1.18
effect
effect
1
1
1
0
0
0
0
0
50%
O
O
O
O
O
adequate SOP’s
distribution netw ork capacity
increasing maintenance
increasing w ater production capacity
office, computer hard- and softw are, technology)
0
0
0
-0.15
O
in
in
in
in
in
0.15
0.08
0.1
0.25
0.1
-0.4
0.15
0
0
0
0
1
1
1
1
+
+
=
+
+
=
+
=
+
=
+
+
=
=
=
=
=
=
=
=
=
=
=
=
=
11
0.1
0
0
0
0.08
0.1
-0.05
0
0
0
1
1
1
0
0
0.1
0.15
0
0
1
1
0.1
0
0
0 0.08
-0.02
-0.02
0
0.08
0.25
-0.25
0 -0.1
-0.04
6650
80%
1
0
1
0
0
2
1
0
1
0
1
0.54
60%
)
Operational Performance Indicators
12)W ater Losses
13)Continuity
14)Quality
Effect
Effect
Effect
Size
Timing
Size
Timing
Size
Timing
min max 1st full
min max 1st full
min max 1st full
cost of decision
F/C/O
C
C
C
C
Invest
Invest
Invest
Invest
Invest
0
0
0
20%
indication
Possible decisions
O
0.05
15)Coverage
Effect
Size
Timing
min max 1st full
effect
a
0
6650
effect
r
+
=
=
+
=
=
+
=
+
+
+
+
+
=
=
=
+
=
=
=
=
=
=
=
=
=
=
10
value (01000 units)
e
200
100
100
100
200
10
300
10
100
200
400
100
10
100
100
200
10
10
100
200
1000
200
1000
100
1000
300
300
200
11)Collection efficiency
Effect
Size
Timing
min
max 1st full
effect
Connection fee reduction for low er income households
=
Customer aw areness campaign
Fire personnel
=
Illegal connections detection program
Implement a customer caring service
Increase no of bill collectors
Customer GIS system
Increase flexibility of bill payments
Invest in adequate SOP’s
Invest in office, computer hard- and software, technology, etc Meter calibration program
Training program
Cutoff non paying customers
=
Fire personnel
=
Invest in adequate SOP’s
Invest in other office, computer hard- and software, technology,- etc
Increase tariff
=
Tariff structure set to cross-subsidize poor hh
=
Training program (HRD)
Fire staff
=
Invest in additional (w ater) sources
Invest in adequate SOP’s
Invest in distribution network capacity
Invest in increasing maintenance
Invest in increasing w ater production capacity
Invest in office, computer hard- and software, technology)
Leakage reduction program
Training program (HRD)
# of positive and negative effects
maximum effect (cumulative effect of positives)
maximum investment
STARTING KPI (CHOKWE) in %
p
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
effect
value (01000
units)
F/C/O
C
C
C
C
C
C
C
C
C
C
C
C
F
F
F
F
F
F
F
O
O
O
O
O
O
O
O
O
Commercial Performance Indicators
9)Nr. of customer complaints 10)Affordability of tariffs
8)Commercial NRW
Effect
Effect
Effect
Timing
Timing
Size
Size
Timing
Size
min
max 1st full
min
max 1st full
min max 1st full
effect
Possible decisions
indication
Decision
maker
O
e
C
effect
C
=
=
=
+
+
=
0
0
0.2
0.2
0
1
1
2
=
=
+
-0
0.2
0
2
=
=
=
=
=
=
=
=
=
=
=
=
+
=
=
-
=
=
=
+
=
=
=
=
=
=
=
=
=
=
-
0
0.2
0
2
0
-0.2
0
1
0
0
0
0
0
0
0.4
0
1
0
3
0
0
0
0
0
0
0
0
0
-0
0
1.2
100
24%
=
+
=
-0.1
0.2
0
1
0
-0.2
0
1
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
-
0
-0.2
0
1
+
0
0.4
1
3
=
+
+
+
+
0
0
-0.1
0
0
0.2
-0.4
0.1
0.4
0.2
0
1
0
1
0
1
3
1
3
1
+
+
+
+
0
0
-0
0
0
0.2
0
0.2
0.4
0.2
0
0
0
1
0
1
0
1
3
1
=
+
+
=
=
+
+
11
0
-0.1
0.4
0.2
1
0
2
1
+
+
8
0
-0
0.4
0.2
1
0
2
1
+
+
11
-0
0
1.9
100
80%
-0
0
1.6
100
###
0
0.2
0
1
+
70
Appendix 17: Screenshot Water management game
71