Introduction to Financial Benchmarking for Small Water Systems



"This training module was developed..."



What is performance assessment?

Three (3) Reasons Why small water systems should conduct performance assessments

Why conduct performance assessments?

National Performance and Results Act of 1993

Various Publications

Excellence in Action: Water Utility Management in the 21st Century

Benchmark Investigation of Small Public Water System Economics

Why conduct performance assessments?

Moody’s Investor Service

Why conduct performance assessments?

SDWA  Capacity Development

SDWA  Capacity Development

SDWA  Capacity Development

Financial Performance is the Key

Finances are KEY to successful water system management

Why is Financial Assessment Important?

“Small systems must operate like a business”

Assessing Financial Capacity

What is Benchmarking?

bench·mark [ bénch “märk ]  noun

bench·mark·ing  [bénch "mär-king] noun




BENCHMARKING: key definition components:

Benchmarking : Terms and Concepts

Indicators vs. Benchmarks

Types of Benchmarking

Metric Process

Types of Comparisons

External Comparisons

“Explanatory” factors

Why Benchmark?

How To Do Financial Benchmarking

"Operating since 1927"

System 176 – in numbers

"Increase water rates"

System 176 Benchmarking Goals

Benchmarking Steps

Benchmarking Steps – before you get started…

System 176 – Getting Started

Benchmarking Steps

 Select function to investigate (WHAT to benchmark)

Revenue Sufficiency

Warning! Benchmarking and Water Rates

Benchmarking Steps

Financial Indicators

Identify performance measure

Special Role of Cash Flow

Benchmarking Steps

Types of Comparisons

Benchmarking Steps

Phase 1. Benchmarking analysis

Step 4 Collect and analyze the “data”

Net Revenue Worksheet

Net Revenue Worksheet (cont.)

Net Revenue Calculation

Phase 2. Benchmark analysis

Performance measures: Revenues

Peer Group: Data Sources & Characteristics

Benchmark Comparison: Revenues

Revenue Comparison results

Performance measures: Expenses

Benchmark Comparison: Expenses

Expenses Comparison results

Phase 3. Benchmark analysis

Performance Measure: Expense Per Connection

Benchmark Comparison: Expense Per Connection

Identify peer groups

Phase 4. Benchmark analysis

Benchmarking Steps

Communicate findings to decision makers

Step 6 Initiate a performance improvement program

Step 7 Recalibrate benchmarks


Resources and References

Ratio 8

The International Benchmarking Network for Water and Sanitation Utilities (IBNET)

2000 Community Water System (CWS) Survey

National Characteristics of Drinking Water Systems Serving Populations Under 10,000

Midwest Technology Assistance Center

Public Water System Operation - Developing Financial Capacity - Electronic Workshop Module

"Introduction to Financial Benchmarking Workbook"

Questions or Comments