Chapter 1:

Part C – Management Introduction

TABLE OF CONTENTS
CHAPTER 1 – INTRODUCTION ............................................................................... 2
1.1. Objective of the Manual ......................................................................................... 2
1.2. Present challenges being faced by urban water service providers/utilities and need
for a management approach ............................................................................................. 2
1.3. “Management” in an urban service provider/utility context ..................................... 3
1.3.1. Key attributes of an effectively managed urban water service provider/utility .............. 4
1.4. Management approaches for creating effectively managed urban water service
providers/utilities ............................................................................................................... 7
1.5. Case Studies ......................................................................................................... 9
1.5.1. Hyderabad Metropolitan Water Supply and Sewerage Board ...................................... 9
1.5.2. Phnom Pehn Water Supply Authority, Cambodia ....................................................... 10
1.6. Contents of the Manual ........................................................................................ 11

List of Figures
Figure 1.1: Attributes of an Effectively Managed Service Provider/Utility and Key
Management Approaches ..................................................................................................... 7
Figure 1.2: Revised Organisational structure of HMWSSB .................................................. 11

List of Annexures
Annexure 1.1 Checklist for engineers/managers regarding current status of attributes of an
effectively managed water service provider/utility ................................................................ 13

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 Chapter 1:
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CHAPTER 1 – INTRODUCTION

1.1. Objective of the Manual

This manual is intended to provide engineers/managers of urban water service

providers/utilities with guidance, tools and resources required for strengthening their
operational and managerial capacities. In conjunction with the guidance contained in
Part A and Part B, this manual will facilitate urban water service providers/utilities to
provide services in line with national norms as defined in the Service Level
Benchmarks1 (SLB), which were notified by Ministry of Housing and Urban Affairs
(MoHUA) in 2008, pertaining to coverage, quantity, quality, reliability, sustainability,
and cost recovery of water services.
This manual provides information on existing legal framework, institutional
arrangements and key initiatives (policies and advisories, programs/schemes and
data/information management initiatives) in the urban water sector in the country. It
also aims to make engineers/managers aware about innovative and cutting-edge
management strategies and approaches relevant for the urban water sector. It
provides guidance on themes including institutional strengthening and capacity
building, financial planning and accounting, asset management, Management
Information Systems (MIS), Public Private Partnerships (PPPs), resilience building
and contingency planning which are crucial for strengthening urban water service
delivery. This manual also aims to sensitize engineers/managers of urban water
service providers/utilities on the need for inclusion, equity and customer focus in
service delivery.

1.2. Present challenges being faced by urban water service providers/utilities

and need for a management approach

Urban water service providers/utilities are facing numerous challenges, including the
following:
Rapid increase in population of urban centres: In 20112 , India’s urban population
was 377.16 million which rose to 461 million in 20183 (as per United Nation’s World
Urbanisation Prospects – 2018 revisions). It is estimated that much of the population
increase between 2018 and 2050 will take place in urban areas and the country’s
urban population will double to ~877 million by 20504. This extraordinary scale of
urban population growth poses a huge challenge with respect to provision of water
supply services. The rapid increase in urban population requires tapping of new
water sources and enhancement of existing ones to meet the ever-increasing

1
The Handbook on Service Level Benchmarks is available at https://cpheeo.gov.in/upload/uploadfiles/files/Handbook.pdf
2 Source: Census 2011
3 Source: UN World Urbanisation Prospects, 2018 revision (https://population.un.org/wup/Publications/Files/WUP2018-
Report.pdf)
4 Ibid.

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 Chapter 1:
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demand. Further, as cities expand geographically there is also a need to undertake

expansion of the water supply network to cover newly included areas.
Limited water resources and increasing demand is pushing cities to tap
distant sources of water: While fresh water sources are finite, the demand from
different uses (domestic, agricultural, industrial, etc.) is increasing. The increasing
demand for water coupled with depletion and/or pollution of local sources of water is
forcing cities to tap distant sources which in turn is resulting in higher transmission
losses and increasing cost of water.
Archaic water supply infrastructure: Lack of periodic maintenance and
rehabilitation of urban water supply infrastructure is not only reducing its operational
life but also disproportionately increasing maintenance costs. Urban water service
providers/utilities continue to operate poorly maintained assets much beyond their
designed utility period. This leads to loss of scarcely available water from the existing
distribution system and hampers sustainable service delivery. The Non Revenue
Water (NRW) level is quite high in Indian cities with huge volumes of treated water
being lost during transmission and distribution.
Management, financial and governance constraints: Urban water service
providers/utilities are operating under severe human and financial resource
constraints. There is limited availability of skilled and experienced staff and many
positions remain vacant. Urban water service providers/utilities are unable to cover
their Operation and Maintenance (O&M) costs due to high NRW which leads to lost
revenues and increased operational costs. Further, the absence of political will for
implementation of reform agenda, lack of engagement with consumers, limited focus
on inclusion is resulting in sub optimal service delivery.
These factors, along with climate variability, are creating unprecedented challenges
for urban water service providers/utilities. Combined impacts of sea level rise, river
flooding, increased frequency and magnitude of extreme rainfall, heatwaves, water
scarcity, water pollution, aging or lacking infrastructure calls for improved
management and governance capacity in urban water service providers/utilities and
these are of crucial importance in order to accelerate the transition to 24X7 Drink
from Tap water service delivery.
In this context, it becomes important for urban water service providers/utilities to
adopt management approaches that will enable them to organise their resources and
activities in order to ensure excellence, equity and sustainability in service delivery
and also make them resilient to future challenges and shocks.
While every urban water service provider/utility must adopt management approaches
suitable for its unique set of opportunities and challenges which will be based on
their respective contexts, there are certain common approaches and tools that can
help urban water service providers/utilities ensure effective service delivery and build
resilience to future challenges.

1.3. “Management” in an urban service provider/utility context

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 Chapter 1:
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The term management refers to the process of planning and organization of

resources and activities of an entity/organization to achieve its goals in the most
effective and efficient manner possible. Efficiency is described as the ability of the
entity/organization to undertake its roles and activities properly at minimal costs
while effectiveness is defined as the completion of tasks within prescribed timelines
to yield tangible results.
Effective management would help urban water service providers/utilities ensure
efficient and effective service delivery that is, ensuring that good quality (Drink from
Tap) water supply is available to all consumers (domestic, commercial, industrial and
institutional) as per prescribed timelines and at minimum costs.

1.3.1. Key attributes of an effectively managed urban water service

provider/utility5

There are seven key attributes of an effectively managed urban water service
provider/utility, which cover various service delivery domains including, operations,
infrastructure, stakeholders (including consumers), service quality and financial
performance. (Figure 1.1)
1. Service Quality: The urban water service providers/utilities must ensure “fit
for purpose” (well -suited) water supply which meets the existing requirements
under the BIS Drinking water specification IS 10500:2012; Second
Amendment6 and Government of India’s (GoI’s) SLBs which were notified by
Ministry of Housing and Urban Affairs (MoHUA) in 2008, along with being
consistent with consumer, public health, ecological, and economic needs.

2. Organisational Development: The urban water service provider/utility must

recruit and retain a workforce that is competent, trained and motivated. Urban
water service providers/utilities must work towards creating a participatory,
collaborative work culture dedicated to continual learning, improvement, and
innovation. They must also work towards application of organisational
development (OD) approaches in order to create an open, diverse, inclusive
and equitable work environment. The urban water service providers/utilities
must invest in regular and periodic opportunities for professional development
and career enhancement of its employees through training, capacity building,
exposure visits, etc. Such opportunities must take into cognizance the
differing needs and expectations of all genders and age groups that comprise
the workforce. Along with capacity building on technical aspects there is also
a need to sensitize officials on soft skills such as customer orientation, social
equity, stakeholder engagement, etc. The details of organisational

This section is adapted from “Effective Utility Management: A Primer for Water and Wastewater Utilities, August 2017
5

available at https://www.epa.gov/sustainable-water-infrastructure/effective-water-utility-management-practices
6
Available at http://cgwb.gov.in/documents/wq-standards.pdf

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 Chapter 1:
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development, staffing and capacity building approaches that can be adopted

by urban service providers/utilities are outlined in Chapter 3.

3. Financial Viability: The urban water service provider/utility must plan for the
full life-cycle cost of its operations. They should maintain an effective balance
between long-term debt, asset values, Operation and Maintenance (O&M)
expenditures, and operating revenues. Further, the urban water service
provider/utility must put in place user charges that are (a) consistent with
community expectations and acceptability, taking into account affordability
and the needs of disadvantaged/marginalised households and (b) adequate to
recover costs (recovering O&M costs in the short term and capital costs in the
long term). The urban water service provider/utility must also institutionalise
robust systems for billing and collection of payments. They must also leverage
opportunities available to diversify revenues and raise capital through
adoption of new business models. Financial planning is critical for ensuring
operational and financial viability and financial management approaches and
tools are outlined in Chapter 4. In addition, involvement of the private sector
can help not only in leveraging financial resources but also in achieving
service excellence. The merits of involving the private sector to achieve 24X7
Drink from Tap water supply along with learnings from engaging with the
private sector in urban water sector are presented in Chapter 8.

4. Stakeholder Engagement: The urban water service provider/utility must

engender understanding and support from all stakeholders (the term
‘stakeholder’ has been defined as anyone who can affect or be affected by the
urban water service delivery), including consumers (domestic, commercial,
industrial and institutional), Resident Welfare Associations (RWAs), Civil
Society Organisations (CSOs), Non-Governmental Organisations (NGOs),
elected representatives, regulatory authorities, etc. The service provider/utility
must actively engage with all stakeholders in order to understand their needs,
to consult/apprise them regarding decisions that may affect them and to raise
awareness and prompt behaviour change. The urban water service
provider/utility must remain committed to delivering reliable, responsive, and
affordable services in line with GoI’s SLBs. In order to understand and
respond to consumer needs and expectations the urban water service
provider/utility must make use of innovative communication methodologies
and tools. The service provider/utility must also institutionalise robust systems
for consumer grievance redressal, consumer feedback and mechanisms for
communication with stakeholders during emergencies. The details on
mapping relevant stakeholders and how to engage with them is presented in
Chapter 5.

5. Infrastructure Strategy and Performance: The urban water service

provider/utility must conduct detailed assessments related to the condition of

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 Chapter 1:
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and costs associated with critical infrastructure assets. It must plan

infrastructure investments consistent with community needs and priorities,
anticipated growth and system reliability goals. The infrastructure investments
must factor in adaptation strategies to account for climate change / variability,
disasters, emergencies, etc. The urban water service provider/utility must
maintain the condition of all assets over the long-term at the lowest possible
life-cycle cost and acceptable risk. In addition, the urban water service
provider/utility must also ensure that asset repair, rehabilitation, and
replacement efforts are coordinated with the community in order to minimize
disruptions and other negative consequences. Chapter 6 details out the Asset
Management strategies in an urban water supply context.

6. Operational Optimization: The urban water service provider/utility must

ensure ongoing, timely, cost-effective, reliable, and sustainable performance
improvements in all facets of its operations so as to improve public health
status and protection of the environment. The urban water service
provider/utility must also undertake performance monitoring making use of
automated and Information Technology (IT) enabled “smart” systems. Data
and information gathered from such monitoring systems must be used to
guide performance improvement action. The service provider/utility must
strive to minimizes resource use, loss, all forms of waste and any other
impacts from day-to-day operations. Details on development of a
Management Information System (MIS) has been presented in Chapter 7.

7. Resilience and Business Continuity: The urban water service

provider/utility must effectively anticipate, respond to, and avoid
risks/problems. It must work towards proactively identifying, assessing,
establishing tolerance levels for, and managing a full range of risks (including
interdependencies with other services, legal, regulatory, financial,
environmental, safety, physical and cyber security, knowledge loss, talent,
and disaster related risks). It must also plan for service/business continuity in
the face of any natural or man-made disasters and/or emergencies. Climate
change and variability is a real threat for the urban water service
providers/utilities as it is likely to affect the sources of water on which the
entire operations depend. Urban water service providers/utilities need to
accept climate change and climate variability as immediate threats and must
start working towards building its resilience to address and mitigate such
threats. Details on how urban water service providers/utilities can assess the
risks arising out of climate change/variability and how they can make the
systems resilient to such exogenous shocks are presented in Chapter 9.
The urban water service managers can fill the checklist attached as Annexure 1.1 to
assess their current status with respect to the 7 attributes mentioned above.

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 Chapter 1:
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Figure 1.1: Attributes of an Effectively Managed Service Provider/Utility and Key

Management Approaches

1.4. Management approaches for creating effectively managed urban water

service providers/utilities7

Global experience has demonstrated that the following approaches have helped
ensure effective management of urban water service providers/utilities by providing a
supportive context for working towards service excellence, equity and sustainability.
1. Leadership and innovation: Leadership is critical to effective organisational
management, particularly in the context of leading and inspiring change within
an organization and its surrounding community. The term “Leadership”, in this
context, refers both to individuals who can be effective champions for
improvement, and to teams that provide resilient, day-to-day management
continuity and direction. Leaders have an important responsibility to engage
proactively with all stakeholders, to promote the organisation as a valued,
competent, and trustworthy community asset, and to collaborate with external
partners. Leaders must ensure that there are enough opportunities to
incorporate both technical and managerial innovations. The experience from
Odisha where the Secretary, Housing and Urban Development Department

This section is adapted from “Effective Utility Management: A Primer for Water and Wastewater Utilities, August 2017
7

available at https://www.epa.gov/sustainable-water-infrastructure/effective-water-utility-management-practices

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 Chapter 1:
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(H&UDD), Government of Odisha has spearheaded the initiative towards

24X7 water supply in Puri and other Urban Local Bodies (ULBs) demonstrates
how leaders can bring about systemic changes through innovative
approaches and help achieve results that may not seem possible at first.
Odisha has demonstrated smooth and speedy implementation of many
innovative interventions related to housing, water supply, slum upgradation,
etc.

2. Strategic business planning: Urban water service providers/utilities must

have a business plan which can serve as an analytical framework for decision
making. A business planning exercise will allow an urban water service
provider/utility to (a) assess current conditions and conduct a Strength,
Weaknesses, Opportunities, and Threats (SWOT) analysis; (b) characterise a
continuum of possible and likely future conditions and their underlying causes
and effects; and (c) establish vision, mission, objectives, strategies, along with
their underlying organizational values. A business plan must be dynamic and
adaptable, allowing the urban water service provider/utility to capitalize on
new and emerging opportunities and it must be prepared through a
consultative process engaging internal and external stakeholders so that it
adequately reflects community values, needs, and interests. The business
plan must also incorporate specific implementation steps that will allow the
urban water service provider/utility to move from its current level of
performance to achieving the national SLBs. The business plan should drive
and guide utility objectives, measurement efforts, investments, as well as its
operations. After developing a business plan, it is important that the urban
water service provider/utility integrates tracking of progress and clear
accountability mechanisms into its management framework, and revisits the
plan on a regular basis.

3. Knowledge Management: Knowledge management, another cornerstone of

effective urban water service provider/utility management, is critical to
ensuring reliable service delivery. Knowledge management must span
Standard Operating Procedures (SoPs), Human Resource Management
(HRM), Organisational Development (OD), business and operating systems,
and data integration and utilization. By ensuring that processes are well
documented, SoPs regularly updated and creating shared knowledge among
various employee categories, an urban water service provider/utility will be
able to respond effectively to the inevitable knowledge loss resulting from
employee turnover or unexpected absences. An effective knowledge
management system should be flexible and open to use of new and evolving
technologies.

4. Measurement: Measurement is critical to management improvement efforts

associated with the 7 attributes mentioned in Section 1.3.1 and is the

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 Chapter 1:
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backbone of successful continual improvement management and strategic

business planning. An urban water service provider/utility, must measure its
performance on the service delivery indicators outlined in the SLBs.
Measurement must be planned as a continuum starting with basic internal
tracking, and moving to more sophisticated baselining and trend analysis.
Further, the service provider/utility must ensure that the results are evaluated,
communicated (internally and externally), and addressed in a timely manner.

5. Continual Improvement Management: Continual improvement plays a

central role in effective urban water service provider/utility management and is
crucial to making progress on the attributes outlined in Section 1.3.1.
Continual improvement management includes (a) conducting a
comprehensive self-assessment, with staff engagement, identify management
strengths, areas for improvement, priority needs, etc.; (b) conducting
consultations with key stakeholders to identify improvement opportunities; (c)
following up on improvement projects underway; (d) establishing and
implementing performance measures and specific internal targets associated
with those measures; (e) defining and implementing related operational
requirements, practices, and procedures; (f) defining supporting roles and
responsibilities to derive clear accountability for conducting assessments and
implementing performance improvements; (g) implementing measurement
activities such as regular evaluation through operational and procedural
audits; and (h) responding to evaluations through the use of an explicit
change management process. Continual improvement management is further
supported by gap analysis, establishment of SoPs, internal trend analysis and
external benchmarking where appropriate, best practice review and adoption,
and other continual improvement tools. It can be used as a framework to help
utilities understand improvement opportunities and establish explicit service
levels, guide operational decisions, form the basis for ongoing measurement,
and provide the ability to communicate clearly with customers and key
stakeholders.

1.5. Case Studies

1.5.1. Hyderabad Metropolitan Water Supply and Sewerage Board8

Following a organisational review which was undertaken by a team comprising of
research staff from the Regional Centre for Urban and Environmental Studies
(RCUES) Osmania University, Chief Engineers (O&M and Projects), Director
(Finance) and a select group of senior personnel from all the functions, an
organisational reform initiative was implemented at the Hyderabad Metropolitan

Source: V. Lakshmipathy, V. Bhaskar, D. Ravindra Prasad, J. C. Mohanty, “Organisational Re-structuring for capacity
8

development – A case study of Hyderabad Metropolitan Water Supply and Sewerage Board (HMWSSB), India.

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 Chapter 1:
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Water Supply and Sewerage Board (HMWSSB) which included the following
elements:

 The organisational structure, reporting relationships, function interface,

identification of function redundancy and creation or extension of new
functions/jobs or work areas was undertaken.
 A new job nomenclature reflecting the transition of a unifunctional engineers
to multifunction managers spanning the entire organisation was implemented.
 The job descriptions for various levels of personnel and function classification
were revised to match the level of responsibility, authority and accountability
of each position.
 Documentation of gaps or deficiencies in knowledge and skills for
implementation of the corporate plan was prepared.
 Formulation of service conditions and regulations including procedures for
implementation of the new charter. This included the introduction of an
"instant sanction" scheme where powers for sanctioning water and sewerage
connections were delegated to the lowest supervisory level.

Managing
Director

Executive
Director

Director Director, Director, Director

Technical Projects Finance Personnel

Chief General
Manager
 Empowerment of first level manager –
reduced lead time for decision making
General
Manager  Greater diversification of top-level
management – functional specialization
Deputy General
leading to professionalisation and on-line
Manager control of operations and maintenance,
personnel and revenue management
Manager, Water
Supply and Sanitation
(O&M)

Figure 1.2: Revised Organisational structure of HMWSSB9

1.5.2. Phnom Pehn Water Supply Authority, Cambodia

Cambodia’s Phnom Penh Water Supply Authority (PPWSA) transformed a war-

ravaged water utility into a commendable model that stands for other cities to

9
Source: https://www.hyderabadwater.gov.in/en/index.php/about/profile-us

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 Chapter 1:
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emulate. Since 1993 with a long series of transformations that started within
PPWSA’s top management, based on a culture of change and donor support, led to
a significant turnaround. Over two decades, PPWSA went through major changes
that resulted in the water utility transforming into a successful water service provider
in the region.
Political support for the reform process came with the country’s Prime Minister giving
full support. The top management was restructured, and dynamic younger personnel
with higher and more suitable qualifications were promoted to senior posts with
additional responsibilities. The water authority was granted autonomous status with
independent management. The factors that contributed to this turnaround included
investing in staff and providing incentives, promoting transparency, involving civil
society, and investing in modern management procedures and technology.
Other improvements included establishing a consumer database, reducing NRW to
less than 6%, improving collections, metering all of the utility’s water supply
coverage, and introducing 24x7 water supply. Operations were also made more
efficient by overhauling old infrastructure and streamlining the billing process.
Because of these reforms, the PPWSA has widened its distribution network from
serving 40% of the population in 1993 to universal coverage with clean, affordable
water.
The poor living in slums were allowed to pay in instalments within 10 to 20 months
during which interest is charged. There is a 30% subsidy for the poor which was
cross-subsidized. The strategy of cost recovery was also successful in reinforcing
autonomy. The successful implementation of the strategy led to less reliance on the
government than anticipated on tariff increases. This reduced the price obstacles for
the poor to manageable proportions.
Lessons learnt:
 The PPWSA has shown that it is possible for reforms to become successful if
the governance framework is supportive and public utilities can make profits
or at least break-even, with affordable tariffs and timely supply of water. It
needs to be recognized that the reform does not happen overnight, the
changes in institutional arrangements and management practices took over
two decades.
 The success of PPWSA is a result of several factors including a General
Director with vision and leadership to push through a culture of change, a
desire for change at the local political stakeholder level, sufficient autonomy to
be able to implement reforms as well as donor backing and shared objectives
between line ministries, employees and donors.
 This case illustrates that a public sector utility can implement a management
approach more akin to that of a private sector company based on results and
incentives.
 Risks which were identified during the transformation included the financial
viability of PPWSA, the security situation within the country, and government’s

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 Chapter 1:
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inability to carry out reforms. The ability to mitigate these risks based on the
factors changes on different aspects such as annual reviews of tariffs,
programme to finance the cost of connections for the poor and allowing for
flexibility in policy formulation and institutional proposal proved successful.

1.6. Contents of the Manual

The manual is organised into 9 chapters. While the first two set the context the
remaining six provide guidance and tools on how to build management and
operational capacities and developed attributes of efficient urban water service
providers/utilities as defined in Section 1.3.1.
Annexure 1.1 Checklist for engineers/managers regarding current status of attributes
of an effectively managed water service provider/utility

S. Parameter Yes No
No
1 Are the water services being provided in line with the GoIs
Service Level Benchmarks
2 Does the water quality adhere to the IS 10500:2012; Second
Amendment
3 Are organisational development (OD) approaches being
integrated to create an open, diverse, inclusive and equitable
work environment
4 Are regular and periodic opportunities provided to staff for
professional development and career enhancement (including
training, capacity building, exposure visits, etc.)
5 Are sessions held to sensitize staff on softer aspects such as
customer orientation, social equity, stakeholder engagement, etc
6 Is there an effective balance between long-term debt, asset
values, Operation and Maintenance (O&M) expenditures, and
operating revenues
7 Are the existing tariffs adequate to recover O&M costs?
Is there a plan to introduce volumetric tariff and metering to
sustain O&M costs in the short to medium term?
8 Is the organisation undertaking an annual financial planning
exercise
9 Has the organisation mapped all key stakeholders
10 Does the organisation actively engage with all stakeholders in
order to understand their needs and to consult/apprise them
regarding decisions that may impact them
11 Has the organisation launched a communication campaign to
educate the consumers on water conservation and other issues
12 Is there an up-to-date database on the condition of and costs
associated with critical infrastructure assets

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13 Does the organisation have an Management information system

14 Does the organisation make use of automated and IT enabled
systems for service delivery and performance
measurement/monitoring
15 Has the organisation undertaken a risk assessment for climate
change / variability
16 Has the organisation initiated a plan for climate change risk
mitigation

13