44126 The Water and Sanitation Program April 2008 is an international partnership for improving water and sanitation sector policies, practices, and capacities to serve poor people Field Note Performance Improvement Planning Designing an Effective Leakage Reduction and Management Program Reducing nonrevenue water and maintaining it at target levels is important for any service provider looking to improve quality of service, financial soundness, and creditworthiness. In the longer term, the effectiveness of nonrevenue water programs is a function of managerial efficiency and institutional accountability. High levels of nonrevenue water result from huge volumes of water lost through leaks or water not invoiced to customers or both, and this seriously affects financial viability of water providers. Executive Summary Context One of the principal concerns today for the deteriorating quality More than 40 percent of water of water supply and sanitation services in India is the high produced in many Indian cities does not levels of nonrevenue water (NRW)—the difference between the earn any revenue, be it water lost before amount of water put into the distribution system and the amount reaching the consumer or high volumes of water not being billed for or both, of water billed to consumers. High levels of NRW result from therefore contributing to poor cost huge volumes of water lost through leaks or water not invoiced recovery and hence poor service quality to customers or both, and this seriously affects financial and coverage. By no means could this viability of water providers through lost revenues, increased estimate be considered accurate, given operational costs and, eventually, increased capital costs. the absence of any meters—bulk or customer meters—in most cities. Reducing nonrevenue water levels does not necessarily Ineffective metering is not the only cause compromise on a service provider’s ability to subsidize services of nonrevenue water; old and corroded for the poorer sections of the population; rather, it allows for pipes and fittings, poor billing, free improved transparency and accountability, and for ensuring flowing services to many, and a lack of better targeting of subsidies such that they are more equitable willingness to improve upon billing and and actually reach poor people. collection practices also contribute to it. Many providers also lack the ability to Reducing NRW and maintaining it at target levels is hence an understand the baseline situation of important task for any service provider looking to improve NRW—a critical first step if one is to quality of service, financial soundness, and creditworthiness. move towards effective NRW reduction. The approach to reducing NRW includes a set of activities High levels of nonrevenue water are aimed at the optimization of water supply through improved also a result of poor institutional operations, maintenance, and sound management practices of arrangements under which service distribution networks as well as governance and management providers currently operate. The reforms through specific operational and commercial strategies. incentives to be more accountable, to However, if NRW programs are to remain sustainable in the manage and perform better, and long run, they must target institutional and organizational to have a revenue strategy that reform while encouraging efficiencies through technical encourages a commercial orientation to and managerial improvements and enhancing human services currently remain very poor in resource capacity. the country. The enabling financial incentives for encouraging service This field note captures the core principles for the effective improvements are also lacking, since implementation of nonrevenue water programs through real providers count on virtually world examples of service providers implementing such unconditional financial support from programs in India and Vietnam. The case studies demonstrate government or from subsidies within that successful leakage reduction and its effective and municipal accounts. sustainable implementation has not been a result of erratic and irregular technical exercises to reduce physical losses. On the contrary, these nonrevenue water programs have been successful because of the continuous effort to control physical and commercial losses while also bringing in managerial efficiency and institutional accountability. 2 Performance Improvement Performance Planning: Improvement Designing an Planning for Effective Leakage Upgrading Reduction Urban Waterand Management Program Services Box 1: The Criticality of Nonrevenue Water Management The basic aim of the performance improvement series is to help water utilities and service providers understand and adopt mechanisms that promote cost recovery and sustainable revenue strategies, as well as help achieve financially viable and sustainable improved services. The objective is to be able to focus not only on specific performance improvement areas by advancing technical, commercial, and operational efficiency—such as leak reduction, billing and collection, customer service, and tariff setting, among others—but also ensure that such improvements remain sustainable and viable in the long term through arrangements such as performance agreements, monitoring, and evaluation. This issue, No. 3 of the series, discusses the importance of the reduction and management of nonrevenue water (NRW) as a critical step towards improving the financial soundness of any water utility. Its objective is to promote, among Indian water providers, a good understanding of the causes of NRW and ways to design and manage a system to control it. The series also showcases some real world examples of NRW management in India and East Asia. management established in the control commercial losses since the Improving managerial, organizational, and latter helps improve the revenue stream and Sustaining institutional environment. of the water company almost immediately. These programs will, NRW Levels The field note uses case studies to however, need to be implemented in demonstrate that successful leakage the broader context of tackling the Reducing nonrevenue water, and hence reduction is not a result of sporadic and managerial, organizational, and improving cost recovery, is an important irregular technical exercises to reduce institutional environment so that they task for any service provider since it is physical losses. Such programs should remain sustainable and effective in the considered a crucial step towards rather be a continuous effort and must long run. improving its financial soundness and creditworthiness. In spite of its potential Box 2: Nonrevenue Water benefits, NRW reduction is not easy to implement, especially in an intermittent Nonrevenue water is the difference service environment. Reducing NRW is between system input volumes and not technically difficult; it is, however, billed authorized consumption. It challenging in a governance sense: for consists of: instance, illegal connections that • Unbilled authorized consumption contribute to NRW can only be (including water for fire fighting or eliminated when utilities and service free water distributed at standpipes providers have autonomy and or provided to religious institutions). discipline, and when they are made • Apparent losses (including accountable for keeping illegal unauthorized consumption and connections under control. The metering inaccuracies). approach to reducing NRW levels • Real losses (including leakages includes a set of technical programs from transmission or distribution and activities aimed at the optimization mains, leakages and overflow from of water supply through improved utility storage and balance tanks, operations and maintenance, sound and leakages in reticulation commercial practices and network systems to the point of metering). refurbishment, rehabilitation and 3 A water balance calculates nonrevenue water into its respective components and helps identify where the main problem areas lie. Box 3: Synopsis of Three Case Studies Understanding Bangalore, capital of the Indian state of Karnataka, has a population of about the Magnitude 5.3 million (2007). The city’s water needs are met by the Bangalore Water of the Problem Supply and Sewerage Board, a publicly owned water utility. It is responsible for providing water supply, sewerage system, and sewage Part of the problem in understanding disposal as well as for preparing and implementing plans and water supply the magnitude of NRW lies in the lack schemes in its service area. of a meaningful standard approach to estimate and report NRW levels. Very The Board was losing over 40 percent of its water until it undertook some little data is available because water robust strategies for reducing and controlling water leakages that included a utilities lack the systematic reporting pilot nonrevenue water project. These have helped the Board in increasing and monitoring systems, such as water service coverage and quality as well as improving the commercial viability of table calculations, for assessing water water services. losses and NRW performance. A water Jamshedpur is an industrial city in the East Singhbhum district of Jharkhand balance calculates NRW into its in India. It has a total population of about 0.7 million people and is home to respective components and helps the first private iron and steel company of the country. The Jamshedpur identify where the main problem areas Utilities and Services Company Limited is a wholly owned subsidiary of lie. A water audit helps review the water private company Tata Steel that was created on August 25, 2003, out of Tata system and assesses performance by Steel’s Town Division, to improve the quality of civic services in Jamshedpur.1 quantifying total water losses and leakages in the network as the The service provider in Jamshedpur provides comprehensive municipal difference between the water input to services including water and wastewater management to the township. It has distribution and the sum of the various recently undertaken various performance improvement measures including a components of water consumed. A proactive bulk metering practice and a pilot District Metered Area for complete system appraisal helps arrive controlling water losses in its distribution system. As a result of these at a water balance calculation, through initiatives the utility has been able to serve new neighborhoods with water an estimation of real losses, apparent supply through saved water from controlling nonrevenue water. losses, and unbilled authorized The Haiphong Water Supply Company is a public utility that provides consumption (Table 1). water supply services to the urban population of Haiphong city—the third As subsequent case studies indicate, largest city in Vietnam—and has a population of about 1.7 million. It is owned water audits and system appraisals by Haiphong Peoples’ Committee and is regulated by the Department of were undertaken so that providers Transport and Public Work Services. The city was receiving water supply of could understand and analyze the 325 lpcd (or liters per capita per day) but, given very high levels of magnitude of the problem, identify the nonrevenue water, the city’s demands were not being met. areas that required specific attention The company piloted its ‘Phuong model’ in 1993 and simultaneously instilled and undertake technical and institutional and management changes (new utility management team, commercial measures to target and considerable changes in the organizational structure and operating rules and keep NRW under control. A water audit management style, including administrative decentralization), all of which in Jamshedpur indicated huge water helped achieve reduced nonrevenue water (from 70 percent in 1993 to losses in one of the main trunk lines of 32 percent in 2002), increased water revenues of 5.5 times during the network which, when repaired, 1993–2001 and improved quality and standards of service. immediately brought down the levels of NRW. Similarly, in Bangalore, a water audit helped determine that maximum leakages were occurring at the point of 1 Tata Steel (formerly the Tata Iron and Steel Company Limited, TISCO) is Asia’s first and India’s largest integrated private sector steel company that was established in 1907 in the city of Sakchi, which was originally the name of the town that came to be more service connections, which were then famously known as Jamshedpur. accordingly controlled. 4 Performance Improvement Performance Planning: Improvement Designing an Planning for Effective Leakage Upgrading Reduction Urban Waterand Management Program Services Table 1: Water Balance Calculation System input volume Authorized Billed metered Billed metered Revenue (measured by input consumption consumption consumption water meters, after checking Billed unmetered for their accuracy) consumption Unbilled authorized Unbilled metered Nonrevenue consumption consumption water Unbilled unmetered consumption Water losses Apparent losses Unauthorized consumption Metering inaccuracies Real losses Leakages on transmission and/or distribution mains Leakage overflows at utility storage tank Leakage on service connections up to point of consumer metering Source: IWA, 2000. 5 Utility managers will need to understand the levels and sources of nonrevenue water through a systematic review of the network and how it is being operated. Components of NRW Addressing this question requires that utility managers understand the level and sources of NRW through a systematic review of the network, how it is being operated, and what the commercial practices of the service provider are (Box 4 and Table 2). • A review of the network condition and management helps determine physical losses2 that result from faulty, corroded, and old water transmission and distribution mains, overflowing service reservoirs, and utility storage tanks. They are a result of poor operations or maintenance, lack of active leakage control, and deteriorating or poor quality of underground assets. • A review of commercial practices determines the nonphysical or apparent losses. This involves, among others, an analysis of completeness and accuracy of customer database, billing Box 4: Understanding the Components of Nonrevenue Water procedures and frequency, tariff structure and subsidies, metering Several levels of analysis would need to be undertaken for a nonrevenue policy, handling of illegal water review: connections, and response to • Discussions with or among senior staff to review current management customer queries. practices, financial and political constraints and influences, attitude towards leak detection and reduction, customer database • Unbilled authorized consumption recordkeeping, and so on. comprises water for operational purposes, firefighting, and for • Discussions with or among operational staff on how the systems are services to special consumer operated, including how water leakages are detected and managed. groups as may be authorized in • Review of technical and commercial data to validate the issues discussed with management and staff and, combined with the results 2 of the Water Audit, to get a broad picture of the situation. Reviewing network conditions and management helps understand the levels of physical losses. This is done through a review of the network age, materials used, hours of supply, • Gather more data to complement the existing ones and implement service pressure, valves operation, frequency of breakages, particular local characteristics influencing water loss (corrosive a systematic collection of key data, if that is not a current soil, and so on), leakage repair, attitude and level of practice already. technology available for monitoring and detecting leakages, staff capabilities, skills and awareness levels, among others. 6 Performance Improvement Performance Planning: Improvement Designing an Planning for Effective Leakage Upgrading Reduction Urban Waterand Management Program Services specific tariff regimes. It also includes the difference between actual and estimated consumption where there is a volumetric tariff but no functional meters or water consumed by legal customers where billing is based not in actual or estimated terms but according to certain physical household characteristics. Table 2: Components and Causes of Physical and Nonphysical Water Losses Losses Components Causes Unbilled authorized Unbilled metered consumption Water delivered to special customers that are not billed consumption although they are metered Water used for operational purposes (flushing and disinfection, if metered) Unbilled unmetered consumption Water delivered to special customers that are neither billed nor metered Difference between actual and estimated consumption Water used for operational purposes (flushing and disinfection, if not metered) Water used for firefighting Nonphysical Unauthorized consumption Illegal connections where there is no access (‘management’ or Illegal connections to properties that have legal ‘apparent’) losses connections Illegal connections of vendors selling water Metering inaccuracies Under-registration of customer meters Poor quality, inaccurate meters Inadequate meter maintenance or replacement policy Stopped meters Data handling errors Physical (real) Leakages on transmission and/or Burst pipes (sudden rupture of pipe) losses distribution mains Leaking joints and fittings Leakage overflows at utility storage tank Seepage from old masonry or concrete walls Float-valves not working Leakage on service connections up Burst pipes (sudden rupture of pipe section or joint) to point of consumer metering Leaking joints and fittings : Adapted from Leakage Management and Control: A Best Practice Training Manual. WHO, 2001, and IWA’s best practice standard water balance. Source: 7 Leakage management for tackling technical losses can be through: passive control; regular leakage surveys; and leakage monitoring in zones through the District Metered Area approach. Addressing Each of the NRW Components Once They are Identified Given that NRW is the difference between water supplied to the system and water billed to the customers, the value of these two variables is key for determining NRW levels. These could be estimated by installing meters at the system entry point and at each and every consumption point as well. Macro-meters can be installed at Box 5: Technical Solutions for Controlling the outlet of the water treatment plant Nonrevenue Water (Bangalore) and storage or distribution tanks and, normally, are also installed in every A study undertaken by Larsen & Toubro-Thames Water consortium on the takeoff in the main conveying system.3 useful life of the Bangalore Water Supply and Sewerage Board’s pipes Customer meters estimate revealed that the pipes were in good condition and would remain so for 30 consumption at the consumer end. more years. The consortium, however, recommended in-situ replacements These are sometimes not installed and rehabilitation, slip-lining of pipeline to improve the flow and reduce due to technical, economic, or corrosion in existing pipes which, if implemented, would increase pipe life political reasons.4 significantly two or three times more than their estimated remaining useful life. These recommendations were adopted for pipes with diameter up to Once input and consumption figures 3 inches that were heavily corroded and encrusted. About 150 km of pipeline are known or estimated (taking into has been rehabilitated, with 700–800 km still pending. account its consequences), NRW can be calculated and the search The Bangalore Water Board also initiated a study in 2000 that indicated faulty and inaccurate meters and leakages in 30- to 40-year-old galvanized iron for the specific solutions can pipes feeding house connections as major causes for high nonrevenue water. then begin.5 Accordingly, the utility undertook replacement of all service pipes connected to corroded galvanized iron pipes with medium density polyethylene pipes. 3 If not installed, the input should be estimated using other The Board also made it mandatory for house service connections in future to methodologies like considering hours of pumping combined with pump curves, weir constants, Parshall channels, hydraulic use medium density polyethylene pipes only. The costs of rehabilitation models, among others. If the input to the system is estimated, the possibilities are that either it is overestimated or worked to US$506 per house connection and were to be paid by consumers underestimated. 4 If customer meters are not installed, estimates are used. through 10 monthly installments of US$5 each. The Board has replaced over These can be derived using different methodologies: by means of the unit consumption per person per day, more complex 150 km of 100 mm galvanized iron pipes and 50,000 house service calculations considering all the appliances existing in the households, conducting sample metering in pilot areas and connection pipework with average length of between 3 and 5 meters. While extrapolating the results, and so on. Again, there are two the per meter cost of replacing the galvanized iron pipes worked to US$26, possibilities. If customers’ consumption is overestimated the NRW calculated will be lower than the actual and vice versa. the per meter cost of replacement for the service pipes cost US$13.75. This The difference between actual and estimated consumption, if positive, contributes to the unbilled authorized consumption. has been undertaken by Larsen & Toubro and Shaw Technical Consultants, 5 Similar principles are used in the District Metering Area approach of leakage management, as discussed later. costing about US$3.75 million in all. 6 US$1 = INR 40 (as of October 2007). 8 Performance Improvement Performance Planning: Improvement Designing an Planning for Effective Leakage Upgrading Reduction Urban Waterand Management Program Services Technical drops in pressure, typically reported by customers or by linesmen. These are breaking down a big network into more numerous but smaller areas, the District Solutions for sometimes part of the day-to-day Metered Areas. Then, for each area the controls that are undertaken by the total net inflows and the volume of Controlling NRW staff of water utilities in response to water billed are measured and the registered complaints. NRW is calculated as the difference Physical losses: Any NRW program between the two figures. Once this is must address technical solutions for Regular surveys are a method of done, areas where NRW levels are tackling physical losses. Such solutions inspection undertaken for a distribution higher than desired are analyzed to will involve network rehabilitation, system where leakages are looked for determine the appropriate solutions refurbishment, and improved with listening devices8 on pipelines and and implement them according to a management; they also depend on fittings, or by reading and analyzing prioritized program. how such leakages are currently metered inflows to temporarily isolated detected and managed, areas as leakages may be indicated by District Metered Areas are discrete their frequency and location, their high night flow rates. These are hydraulic areas created within the assessment and management, how undertaken on a more regular basis supply zones or service stations of the long it takes to achieve and maintain and form part of most leakage city or town with a defined and target leakage levels,7 how expensive management strategies undertaken by permanent boundary that typically such an exercise is (capital and water utilities. cover about 500 to 3,500 connections. operating costs), and whether it is The establishment of District Metered sustainable in the long term. The ease Leakage monitoring in zones is a Areas includes preliminary design, with which such solutions are found more advanced, focused, and detailed site survey and data collection and implemented will depend on comprehensive strategy that monitors and an understanding of the feeder whether network drawings are in place, leakages by creating a hydraulic supply mains, networks valves and meters in how old the network is, and on the system divided into operational zones the area, and the supply pattern. existence of continuous water supply in defined on the basis of service Depending on its supply scheme, each reservoirs, pumping stations, pressure the target area for facilitating detection District Metered Area is installed with zones or other operational and repair of leaks. one or more district meters, which considerations. These operational should be read and recorded regularly Leakage management for tackling zones are further divided into District (ideally it would either have a data technical losses is categorized into Metered Areas within which leakage logger or it would be linked to a central three groups: passive control; regular levels are constantly watched control station for continuous data leakage surveys; and leakage and monitored. recording). For each area, the service monitoring in zones through the District The District Metered Area approach is provider can: Metered Area approach. a way to study an intricate problem • Produce a water balance; Passive control is undertaken in affecting a large (unmanageable) area response to visible leakages in the by dividing it into smaller (more • Monitor night flow-rates; system that arise due to bursts or manageable) ones. In a sense, it means • Perform ‘Step Tests’; 7 Target leakage levels are often based on the Bursts and 8 Some of them are (a) sounding sticks that are simple acoustic • Monitor pressure levels; and Background Estimates, which were developed from a review or electronically amplified instruments used for sounding on all of international literature and consideration of the many fittings, valves, and hydrants and confirming the position of a parameters that influence losses. The original Bursts and leak; (b) ground microphones that involves placing the • Verify consumption anomalies. Background Estimates leakage management concepts and microphone on the ground at intervals along the line of the software were developed in 1992–94, during the United pipe and noting changes in sound amplification as the Kingdom’s National Leakage Initiative. Such techniques are microphone nears the leak position; (c) leak noise correlator These actions allow the service developed on four principal leakage management issues, is the most sophisticated of the acoustic leak location provider to define the relevance of each namely logging and analysis of Minimum Night Flows, the instruments. It relies on the velocity of sound made by the economics of leakage and leakage control, pressure leak as it travels along the pipe wall towards each of two NRW component (physical and management and benchmarking of leakage, and auditing of microphones placed on conveniently spaced fittings. The nonrevenue water. More details on this concept are found in latest versions of correlators have the capability for frequency apparent losses and unbilled Leakage Management: Introduction to WRC Tools to Manage selection and filtering and some have a noise detection head Nonrevenue Water, by R. S. McKenzie and J. N. Bhagwan. that is inserted in the pipe for increased accuracy. authorized consumption), locate leaks, 9 When invisible leaks are suspected, monitoring night flow-rates allows estimating leakage volume from distribution mains, service connections and fittings, after subtracting legitimate customer night use. illegal connections and changes in Box 6: Using District Metered Areas and Bulk Metering to Control for Nonrevenue Water (Jamshedpur) customer categories and detect other problems like pressure increases beyond desirable levels, among others. The drive to reduce water loss levels comes from Jamshedpur Utilities and It is assumed that, as part of the regular Services Company Limited’s realization that every m3 of water lost has operations of the service provider, resulted in huge revenue losses for the company. Given total potable water production of 180 million liters per day, a percent reduction in Nonrevenue customer meters are read on a monthly Water per day amounts to a saving of 1,800 m3 per day or 54,000 m3 per basis for billing purposes (its accuracy month which, cost at US$0.20 per m3, amounts to a monthly saving of checked according to a metering policy) US$0.01 million. Accordingly the utility created a District Metered Area with and the data also used for the water 24-hour supply in its Circuit House Area. The network spans over 1.83 km2, is balance for each District Metered Area. over 75 years old and serves 350 households. The District Metered Area is When invisible leaks are suspected, constantly monitored to see if pressure and leakage levels through 24-hour monitoring night flow-rates allows water supply are maintained at optimal levels. It took the company about six estimating leakage volume from months to design and implement the District Metered Area. distribution mains, service connections The utility is also undertaking a systematic bulk metering program of all and fittings, after subtracting legitimate system inlet connections, large consumers, and industrial connections and customer night use. Best practice outlets. Bulk meters are periodically read and the data downloaded for analysis of District Metered Area flows analysis and calculation of losses in the distribution system. The bulk requires the estimation of leakage when metering program was undertaken in two phases, costing an estimated the flow into the District Metered Area US$1 million, where Phase I was undertaken over a period of 13 months and and customer demand is at its involved the installation of 41 bulk meters at the supply end and up to water minimum, occurring between treatment including metering of all inlets and outlets at its pump houses and 12 midnight and 4 am. Analysis of water treatment plants as well as metering of branch networks and water night flow-rates determines whether tower inlets. Phase II involved installation of 89 meters over eight months consumption in any District Metered including metering tower outlets and connections to associated companies Area is much higher than expected or if and industrial units. it has increased over time, indicating Bulk metering and constant monitoring of its mains has enabled the utility in bursts or undetected leakage. analyzing leakages and in surveying pipelines for illegal and unknown Suspected areas can be inspected connections. This has helped the utility in identifying two extra line more thoroughly using the ‘step testing’ connections in the central network which, when metered, brought about procedure in which pressure in the reduced unaccounted-for water. network is monitored while sequentially These initiatives have brought about impressive results in reduced leakages. closing valves until pressure rises While it is difficult to get appropriate data for NRW given the absence of significantly, showing that the leak in consumer metering, unaccounted-for water in the rising mains and the the last line is closed. industrial water network has fallen; unaccounted-for water in the rising mains Detection of leakage in each District fell from 23 percent in 2004 to 10 percent in 2006. Metered Area is also carried out using Thus, new neighborhoods have been now served with water that was saved equipment such as basic or electronic through these initiatives. The utility is now working on implementing listening sticks, ground microphones customer meters for all 40,000 household connections in order to reduce and leak noise correlators. Water leakages in house connections as well. So far the majority of the domestic pressure levels within a District Metered consumers were paying a fixed monthly rate of US$3.5. The utility feels that Area are also continuously monitored metering of all domestic connections will minimize leakage and promote through pressure loggers deployed at efficient use of water, while allowing it to divert surplus water to other areas of district meter points, elevated zones the city. and major branching points in the network. 10 Performance Improvement Performance Planning: Improvement Designing an Planning for Effective Leakage Upgrading Reduction Urban Waterand Management Program Services Leakages, once identified, must be Box 7: Using a Pilot District Metered Area to brought to controllable ‘target’ Control Leakages (Bangalore) levels, through a mix of pressure management, and repairs or The Bangalore Water Supply and Sewerage Board piloted a nonrevenue rehabilitation of distribution mains and water reduction and control program in May 2003. The project, funded by house connections. These target the Japanese Bank for International Cooperation, spans across 32,000 leakage levels are formulated on connections and 270 km of pipeline (of diameter 50–600 mm and age five to estimated losses from calculating 70 years) in central Bangalore.9 Cost at US$12 million, it was awarded to the individual components of losses in Larsen & Toubro-Thames Water consortium. Thames Water provided the distribution systems and on the technical inputs while Larsen & Toubro was responsible for ground-level customers’ pipework, either as part of pipeline rehabilitation work. The project was implemented in two phases, with an annual water balance or from a night Phase I focusing on NRW reduction, establishment and maintenance of target flow-rate analysis. Target leakage levels NRW levels in each District Metered Area and staff training, and Phase II vary on a case-by-case basis and are focusing on maintaining pressure and NRW levels at target levels as determined by the type of leakage determined in Phase I.10 control policy, the size and number of Phase I involved the formation of 21 District Metered Areas within five service District Metered Areas, the optimal stations in the pilot area.11 The District Metered Areas covered about 1,000 to pressure levels to be maintained, and 3,500 consumer connections, with the exact number of consumers based on the staffing policy. Typically, leakage established boundaries and a network analysis. Once District Metered Areas targets are based on an ‘economic’ were created, levels of NRW were regularly monitored. Leakage detection was level defined as a point of minimum undertaken through noise logging, leak noise correlators, and ground total costs when costs of both leaking microphones, especially during the night hours. Repair work including water and leakage control are taken rehabilitation and replacement of pipes using medium density polyethylene into account. pipes was undertaken. The project controlled for apparent losses through a robust check of meters for accuracy in terms of functionality, water tightness For successful functioning and long and security and their subsequent replacement.12 Physical losses were term sustainability of the District measured using the net night flow method and were monitored on a monthly Metered Area approach, leakage and basis. These calculations also took into consideration the impact of pressure NRW levels must be continuously as monitored in a few identified locations through data loggers. Ideal target monitored and staff awareness, leakage level rates were also established based on international best capacity, and motivation kept at the practice data estimates of water service providers in the United Kingdom in highest possible levels. All the the 1980s.13 information generated through this Phase II involved constant monitoring, leak detection surveys, repair of leaks approach is optimal for feeding a and rehabilitation of pipelines, and retesting of leakage levels in the District hydraulic model of the network that, in Metered Area till water loss levels were reduced and maintained at target levels. turn, will provide feedback to the NRW The pilot project has improved water service standards and quality. It is management program. proposed that this pilot will be extended to all areas of the city. The Japanese Bank for International Cooperation has extended its loan component to Unbilled authorized consumption is US$100 million. The project is designed to cover the balance 0.36 million a result of certain legal, institutional, consumer connections that were outside the pilot zones. and other social considerations that are not always sufficiently justified or compensated. As indicated in 9 This covered areas of High Grounds, Coals Park, Johnson Market, Ulsoor, and Clive Lines Reservoir. 10 Each phase was for 18 months, with a three or four month overrun for complete implementation of Phase I. Table 2, there are mainly four 11 Initially the plan was for 16 District Metered Areas, which was later increased to 21. 12 reasons for unbilled authorized The project tested 5 percent or a minimum of 100 working meters per District Metered Area for accuracy. Faulty consumer meters were identified through customer complaints, billing data and a physical survey of meters in each District Metered Area. consumption. They are discussed here, Of about 31,808 consumer meters surveyed during the pilot, about 30 percent meters were of a specific make; 69 percent of these meters were in good condition and 31 percent of them were either not working or were not readable. All nonworking meters of that together with some ideas on how to make were replaced. In July 2004, about 3,124 meters were replaced. 13 These estimates were inferred through a graph iteration based on a typical situation of leakage management in the tackle them. United Kingdom, deducing what should be the target leakage level for each District Metered Area given a baseline Net Night Flow. 11 Not only can poor people afford to pay for water services but most of them would prefer to have a reliable service so that they can avoid buying water from vendors to cover for shortcomings in the public supply. Water delivered to special customers Box 8: Connecting Poor People to the Network that are not billed: Certain institutions (Bangalore, India) could be regarded as deserving special treatment and, therefore, it may have The Bangalore Water Supply and Sewerage Board has undertaken some been decided that these institutions commendable work in connecting the city’s poor people to piped water services. should not pay for their water The Board found innovative ways to connect them through subsidized connection consumption. However, without making fees, options for group connections, and simplified and easy methods for applying any judgment on the adequacy of this for a new connection. The program was jointly partnered with AusAID during kind of decision, it is desirable that they 2000–02 wherein the project’s Community Development Component examined are based on a predetermined and and tested options for improved service delivery to urban poor people in three pilot sound policy applied objectively. In any slums: Cement Huts, Sudhamanagar, and Chandranagar. case it is also desirable that the number A total of 850 connections (individual and shared) were installed during the pilot of cases should be kept to a minimum. phase. After successful implementation of these pilots, the Bangalore Water Board It is advisable that these users are decided to replicate the results in other slums. The Board’s Social Development metered and sent the bill that indicates Unit undertook extension of water supply and sewerage services through a their consumption and gives them an ‘Package Program’ in coordination with nongovernmental organizations and estimate of how many people could community-based organizations, whereby slum dwellers were allowed to legally have been supplied with the water that connect to services, provided they paid for the connection. Today there are about they are using. This could lead them to 6,000 connections across 46 slums in the city. Households in poor settlements are pay attention to any anomaly in their willingly paying regular water charges. By connecting all slums to piped water, the consumption that could indicate Board is reducing nonrevenue water and hopes to slowly phase out the over wastage and/or internal water losses 15,000 public taps within city limits. that could be fixed. Another option could be to send crew to search for losses inside the premises if the billing system detects an abnormality in the experimented with providing services to quality, as often the public standpost consumption of any of these special poor people and found that they taps are removed and the water flows users. Yet another means could be to willingly paid to connect to a reliable uninterruptedly during supply hours, provide coupons to certain consumer service. Similarly, other Indian cities of thus lowering pressure and increasing groups such as government Baroda, Kerala, and Dehradun as well wastage. Some service providers have institutions, with the coupons allowing as Kathmandu in Nepal indicated resolved this through innovative means for budgeted consumption. through various surveys that like rationalized or subsidized water consumers were willing to pay more for connection fees and subsidized Certain service providers opt for reliable, safe, and adequate water monthly rates, simplified procedures delivering a relatively limited volume of supply services.14 In many cases, and application rules for a new water to poor people for free or service paying for water service allows poor connection so that poor people are them through public standposts on the people to get other services as they indeed encouraged to apply for it, understanding that they cannot afford have a proof of residency and solvency. providing jobs to community members any other kind of service. In fact, not For service providers, connecting on network construction and only can poor people afford to pay for poorer sections of the population administration of applications for new water services but most of them would improves both revenue and service connections, and so on. prefer to have a reliable service that would allow them to avoid buying water Many times, when the service provider from vendors to cover for shortcomings 14 (a) WSP-SA. June 1999. Willing to Pay but Unwilling to is a public entity, government Charge—Do Willingness-to-Pay Studies Make a Difference?; in the public supply. As discussed in (b) Chetan. 1995. Study on Willingness to Pay for Water and institutions are not billed nor do they Sanitation Services—Case Study of Baroda; (c) Whittington, Box 8, the Bangalore Water Board, Dale, S.K. Pattanayak et al. 2001. Willingness to Pay for pay for the water service as this is Improved Water Supply in Kathmandu Valley, Nepal, over a period of five years, Research Triangle Institute, Final Report. regarded as money that goes from one 12 Performance Improvement Performance Planning: Improvement Designing an Planning for Effective Leakage Upgrading Reduction Urban Waterand Management Program Services pocket to another. However, even Illegal connections: Can only be though there may be no physical reduced if water providers have in transfer of the money, the payment place policies to convert them into legal should be accounted for to ensure that connections. An efficient tariff regime the revenue and the cash are available with appropriately targeted subsidies is to the service provider. Of course, vital to address special cases of this requires that the accounts households lacking the resources to of the service provider are clearly pay for the service. As a last resort, a separated from those of other service provider should have credible public entities. measures for disconnecting those who deliberately do not want to regularize Difference between actual and their situation despite the opportunities estimated consumption: There are given to them. Illegal connections can two ways to reduce this element of be tackled through a careful analysis of nonrevenue water: improving the the customer database and comparing quality of the estimates (which could be it to municipal registers or, if existing, very difficult), and installing and reading combining geographic information customer meters, recording the system data with that used by the readings in a database and calculating municipality or other service providers. the difference between readings and In Bangalore, the Water Board has actual consumption. This is important a disconnection policy whereby to capture, especially in cases where connections are initially clamped off billing is not based on meter-based at the street level, after which legal charging practices and where a flat rate notices are sent. In the event that still has been imposed. In such cases it no action is taken, the Board resorts would be good to be able to estimate to disconnection. consumption and see the difference between the two since the imposition In many cases, poor settlements resort of a flat rate also encourages ill to illegal connections because the practices of no water conservation. service provider refuses to connect combined with incentives to the crews them due to many reasons (lack of land This estimate may also be able to that can perform these operations ownership titles, uncertainty on whether indicate that the meters are not in successfully with lower volumes they will become regular customers working condition. of water. and pay their bills, and so on.) The best Water used for operational purposes: solution for this problem would be to Water used for firefighting: The ways Unbilled authorized consumption also find ways to connect poor people and to reduce this component are beyond results from water being used for get them to pay their bills. Again, as the scope of this series. However, the operational purposes such as flushing demonstrated in the case of Bangalore service provider could help authorities and disinfection functions. In such (Box 8), the water utility mobilized find ways to reduce the number of fires cases it would be important to at least slums and successfully helped them or to extinguish them more rapidly keep track of the volume of water used connect to the network. These and effectively. so that it is kept within reasonable limits customers continue to be served with and the utility can inculcate some Apparent losses include water, receive bills, and make habits of controlled use. More efficient unauthorized consumption (basically, payments. Earlier, the Water Board’s flushing and disinfection operations illegal connections) and metering policy was that a connection could can help reduce this component. inaccuracies (under-registration, not be approved unless the resident Measuring the volume of water used for stopped or defective meters, and data provided a proof of residence. Rules these kinds of operations can help if handling errors). were subsequently eased so that the 13 Water utilities will need to incentivize their staff to undertake better billing practices, not only checking for illegal or bypass connections but also for connections with meter inaccuracies. requirement for formal tenure proof was replaced with a simple proof of residence such as a ration card, election identity card or even an identity card. Sometimes, existing legal customers using large volumes of water install illegal, or bypass, connections to reduce their water bill. Analyzing the customer database, billing history, and visiting the customers are ways to tackle this problem. Meter readers can play a very important role detecting this kind of situation. In Bangalore, meter readers and utility staff played an important role in improving commercial efficiencies. The Water Board incentivized utility staff and meter readers through healthy competition to undertake better billing practices, not only for checking illegal or bypass connections, but also of connections with meter inaccuracies (as discussed later). Monthly billing targets were set and reviewed, after which the best performing zone for revenue targets was rewarded. Metering inaccuracies can be divided into two main categories: Meter problems: These could be related to procuring meters of inadequate class or poor quality, premature wear or corrosion due to aggressive water, low flows and only high quality meters that were more bills, from manual recording in a table customers tampering with the meters, reliable, accurate, and durable. containing only the account number among other reasons. Careful attention and address, to remote centralized on selecting the meters to procure is Data handling problems: For providers automatic reading. Deciding on one the best way to avoid the first three who do bill according to actual option for handling the data will depend causes mentioned, while dedicated consumption, taking readings, on the particular circumstance for each customer service and education recording and then handling data by service provider. policies could help to deal with the meter readers is another potential fourth one. Ultimately, a sanctions source of nonrevenue water. However, as a practical consideration, policy could be implemented to deal it is advisable to avoid copying the data with the most difficult cases. As Box 9 There is a wide range of options for from one table to another as much indicates, Bangalore resorted to using recording readings and producing the as possible. 14 Performance Improvement Performance Planning: Improvement Designing an Planning for Effective Leakage Upgrading Reduction Urban Waterand Management Program Services Recording readings through a handheld Box 9: Metering Practices (Bangalore) data entry device could be especially helpful as preloading previous readings Bangalore is one of the few cities in India that has all its 0.4-million could warn the meter-reader of any connections metered, with the metering program being in practice since data entry mistake beyond a certain 1966. Previously all household connections were installed with ‘Class A’ threshold so that he can correct it meters that had an approximate life of three to five years. Costing US$11.2 immediately. (as of 2004), the meter dials were prone to moisture and air and were less accurate. Some utilities in India, in Hyderabad for instance, have been using handheld Under the nonrevenue water project 15,000 meters were replaced with data entry devices for recording meter ‘Class B’ meters that are more accurate and durable. Costing US$30, these readings. The Board has witnessed meters are multi-jet meters, tamper-proof, and robust in nature, having an improved billing efficiencies as a result approximate life span of seven to 10 years. They are air resistant—they of these initiatives. Initially the Board measure air to a lesser extent, since the magnetic drive inside the meter gets outsourced this function to a disengaged once air passes through the meter. These meters also capture very low water flows in case of low pressure supply. specialized firm that had relevant experience in this function. It is The utility has also been actively encouraging regular testing and repair of simultaneously also training its own consumer meters. Initially it was itself undertaking all meter testing and repair meter readers so that they can take work, repairing and testing approximately 1,500 meters on average in a over this function in due course.15 month. In October 2003, it outsourced meter repairs work to a private agency. It charges its consumers a meter maintenance fee for undertaking If these devices cannot be provided these repairs. to the meter readers and they have to record the readings manually, then including the previous reading and an facilities and all the water connections with other measures, may help indication of the expected new reading that it serves. This will mean checking monitor and prevent customers from could be helpful. However, the last bulk meters, replacing customer meters tampering with their meters. A option would also induce the meter at the end of their useful life and also proactive metering policy is also reader to record an ‘educated guess’ actively checking them through regular a prerequisite for the effective of the new readings instead of the tests and repairs. Monthly meter implementation of the District Metered actual ones. reading and billing, together Area approach. In summary, inadequate/no measurement facilities, inadequate calibration of bulk meters, under-registration, poor quality and inaccuracy of customer meters, faulty and stopped meters, inadequate meter maintenance and replacement policy, inadequate meter reading practices and under-estimation of water for free supplies and operational use are problems that can be corrected only if the water service provider has a robust metering policy in place for its own 15 More details on this initiative are found in Series 2, on billing and collection practices. 15 Reducing nonrevenue water is achievable but it remains challenging because the approach to reducing and managing NRW goes beyond technical solutions. Addressing the developing an efficient and reliable the different functions or processes that take place in what one could call the service provider that meets the needs Institutional, of all consumers. As demonstrated in vertical flow within the service provider. Organizational, Box 10, institutional arrangements in In this sense one could identify production, transmission (involving the Vietnamese city of Haiphong were and Regulatory designed such that NRW management main pumping stations, reservoirs and Arrangements was targeted at the ward level. The trunk mains) and retail distribution and selling to the end user. creation of strong local units delivering for Creating decentralized services at the ward This organizational structure resembles a Suitable level demonstrated an innovative way a clear supplier-customer chain where to reorganize the institutional Environment for arrangements for increased each department produces or receives water and has to deliver it to its Controlling NRW accountability. Similarly, appropriate customer. The number of production employee incentive schemes were set and transmission departments is Other policies for keeping NRW at target up in both Bangalore and Haiphong to determined by the number of facilities levels relate to the internal organizational reward staff for improved performance and the way the service provider wants structure, regulatory framework for through bonuses, rewards, certificates, to bundle them, while the number of triggering NRW control, staff capacities and recognition. Such initiatives retail departments would be ideally and training, as well as customer care incentivized staff sufficiently such that it determined by the number of District and information campaigns. These are resulted in improved services. Metered Areas. In this type of important because they ensure that Internal Organizational Structure: organization it is very easy to focus on NRW management programs become a Regarding internal organizational NRW levels and management as the sustainable practice. structure, traditionally, service manager of each department is NRW reduction will only be successful providers have—besides the regular responsible for its own NRW, if there is an adequate enabling administrative, finance, and human considering that the production and environment and a proper incentive resources departments—technical and transmission departments are selling structure for performance commercial departments. the water they receive to their customer improvements. The current inherent downstream the vertical flow within the The technical department is usually institutional deficiencies in the Indian service provider. responsible for water production, context would need to be resolved pumping, storage and distribution, The Haiphong case demonstrates through appropriate institutional network operation and repair, and may how institutional arrangements could arrangements that incentivize service include the engineering department be rearranged such that each ward providers to be more accountable and, that would deal with planning, was made responsible for its own at the same time, clarify roles and designing and construction water supply functions. responsibilities of all stakeholders in the of new assets. The commercial water supply and sanitation sector so Technical and administrative department would produce and that the appropriate stakeholder can be unbundling proved to be an innovative distribute bills, collect payments, and held accountable for performing its way for ensuring that service delivery receive customer complaints. However, specific functions properly.16 improvements were indeed recorded at this kind of organizational structure the individual ward level by making Any NRW management program does not always lead to a strong every local staff more accountable for should hence ensure that the incentives awareness of NRW levels and makes every unit of water produced. are duly aligned with the objectives of effective NRW reduction and Employees felt increased job management more difficult. responsibility because they were bound 16 The issue of improving upon the current institutional An alternative way of internal by trust to the community and, at the deficiencies is beyond the scope of this paper and has been addressed in the Performance Improvement note, Series I. organization takes into consideration same time, monitored by them. 16 Performance Improvement Performance Planning: Improvement Designing an Planning for Effective Leakage Upgrading Reduction Urban Waterand Management Program Services Box 10: Decentralizing Service Delivery (Haiphong, Vietnam) The nonrevenue water (NRW) program in Haiphong targeted the reduction of water losses through Technical and Administrative Unbundling rehabilitation and reconstruction work of the water Technical Unbundling involved enforcing good technical standards network at the ‘phuong’ or ward level. 17 The aim was at the ward level. The utility’s ward offices connected all customers to redistribute recovered ‘lost water’ to areas of poor within their ward to distribution lines through branch connections, supply through a two-phase program. The first phase installing a meter on every connection, and signing a customer was a pilot in one phuong—Lam Son ward—that contract that detailed the company’s and consumers’ rights and would demonstrate to consumers how improvements responsibilities. Metering customers all at the same time helped in water supply services were going to be prevent illegal connections. In addition, the practice of installing a implemented subsequently in the remaining master meter in each ward helped in reconciling ward billing with the 37 phuongs. Lessons from the pilot would then be amount of water the ward received from the water treatment plant. expanded during Phase II to remaining phuongs This helped monitor the points for distributional losses and its starting in 1994, with all 38 phuongs achieving NRW estimate and hence water bill collection efficiency. Improved services improvements by 2000. The model would work were not going to result only from construction of more through unbundling of the water supply network for infrastructure or replacement of water mains, but from ward-by- both technical and administrative aspects (refer Box at ward diffusion of distribution network improvements and from right) such that each ward unit could perform its own careful network management. water supply services. It cost approximately $1 million per ward to fully improve the ward’s water supply Administrative Unbundling involved the creation of ward level local delivery. While ward-level infrastructure improvements Haiphong Water Supply Company consumer service sub-offices, were paid for by the Haiphong Water Supply Company staffed with five or seven members of the community, including a through various means,18 the customer had to pay for manager, two water meter readers, two bill collectors, and a the service connection and for the meter, total cost for technician for minor repairs of pipes and meters and for overall operation and maintenance of the phuong. These offices undertook which ranged between $30 and $60 per household, meter reading, maintenance and revenue collection once the depending on the length of the service pipe. network was rehabilitated and established. Ward-level work began by improving all distribution, branch, and household pipeworks in the ward, complete metering of the wards’ consumers, and implementing a reliable monthly billing and collection system. The company also put in place a disconnection policy for disconnecting consumers if bill payments were delayed by more than 20 days. An office with employees selected from ward residents was also set up and made responsible for all operation and maintenance of the phuong network. This helped provide constant and immediate communication between the utility and consumer, facilitating quick responses to consumer needs and tailoring services according to consumer expectations. At the same time, the employees were privy to information on residents, being familiar with characteristics of the households in their ward. These local staff were incentivized to not cheat the system19 through an employee incentive system where ward level staff salaries were tied to a variety of yearly performance targets as well as a system of rewards (certificates, awards, and financial bonuses) and punishment (written and verbal warnings and salary deductions). For example, if NRW achieved was 1 percent lower than the set performance rate then a bonus of VND 20 million (approximately US$1,200)20 was awarded, 40 percent of which was given to the employee directly responsible and 60 percent for the remaining functions of the utility. Employee performance was evaluated at the department level on a quarterly basis and sent to management for a review. A contract was also signed between the Haiphong Water Company and the ward for defining ward level obligations (consumer level and overall Haiphong Water Company). Consumers were also made aware of the ward’s responsibilities through a billboard, displayed outside the ward office, which detailed both consumer and ward office obligations and responsibilities. Monthly ward People’s Committee meetings were also held for reporting and addressing community water supply service delivery needs as well as to provide feedback on utility performance given the implementation of the ward model. 17 The ward or phuong is the smallest local unit of socialist government in Haiphong, with 1,500 to 3,000 households (10,000 to 16,000 people). 18 In Haiphong this cost was covered not only by company revenues, but also through a Finish International Development Agency grant and a credit from the World Bank for the Socialist Republic of Vietnam’s Water Supply Project. 19 By drawing local staff into ward offices, the risk existed that there could be collusion between the ward employees and the ward consumers. This was countered sufficiently. 20 US$1 = VND 16,216 (as of April 19, 2008). Conversion rates are from www.xe.com; all conversions in the text are approximations. 17 Any nonrevenue water management program should ensure that incentives are aligned with the objectives of developing an efficient and reliable service provider that meets the needs of all consumers. Incentives for improved accountability: Box 11: Incentive-Based Performance Contracts Within an improved institutional and operating structure, water service In some countries water service providers have used performance contracts providers also need to be encouraged for incentivizing staff to undertake sustainable service delivery improvements. to demonstrate improved accountability For instance, in Senegal, the contract included specific and time-bound of functions and responsibilities. targets covering areas of operational efficiency including reduced water In some international good practices as losses and improved billing and collection. The contract effectively well, as detailed in Box 11, service incentivized the private operator to achieve these set targets, by rewarding providers have used performance the private operator not for the water that it produced but for water sold and contracts for incentivizing staff to paid for. better services. Another example can be found in Uganda’s National Water and Sewerage This is also demonstrated in both the Corporation, which signed performance contracts with its respective Bangalore and Haiphong cases where operation areas, using an internal incentive contracting mechanism with employee incentive schemes rewarded financial incentives for encouraging managerial efficiencies. A detailed set of staff for improved performance through performance targets for each area were devised and included, among bonuses, rewards, certificates, and others, improvements in billing and collection and reduced water losses. recognition. Employees were also The performance contracts incentivized staff to meet these performance given disincentives to under-perform, targets through bonuses over and above their regular salaries. since they were penalized when A set of penalties were also imposed in case of poor performance. performance was not up to the mark. Both cases also set up clearly defined performance standards that had to frameworks involving suitable incentives non-achievement. The actual be achieved by employees if they and sanctions, and also clearly performance of the service provider wanted to be rewarded for define the assignment of roles and against these targets could be performance improvements. responsibilities at various levels of evaluated through third party In Haiphong, a particularly transparent government. Such arrangements assessments, financial audits, and incentive scheme encouraged would also need to deal with wastage beneficiary analysis through consumer performance of the line managers at and proper assessment of investment feedback to ensure transparency. In the ward level, where staff and projects by providing reference some cases the provider could also be company shared benefits of any regarding the proportion of subsidy made to comply with disclosure efficiency gains achieved. (if any) included in the tariff and allow requirements that would enhance a correct allocation of costs and accountability in service delivery. Regulatory framework: The regulatory benefits from eventual projects to framework and, especially, the tariff be implemented. Staff training and capacity building: regime in place are also key issues, Equally important for sustainability of particularly when it comes to fulfilling For instance, regulatory frameworks NRW measures is training of staff in the regulatory objectives of setting, can be designed such that the impact new skills and techniques. Any effective monitoring, and enforcing principles of of an NRW program can be monitored. NRW management program would efficient tariffs and improved service The service provider’s NRW require a range of skills at all levels, quality and standards. performance can be reviewed through starting from managers and a memorandum of understanding that professional engineers to technicians Enforcing NRW programs that clearly establishes the various service and plumbers. eventually meet these objectives would delivery related regulatory objectives need to put in place regulatory to be achieved over a specified Staff members need to be motivated mechanisms, institutional timeframe, with related incentives or and skills in techniques and technology responsibilities, and accountability disincentives for their achievement or need to be transferred to them for 18 Performance Improvement Performance Planning: Improvement Designing an Planning for Effective Leakage Upgrading Reduction Urban Waterand Management Program Services effective leakage management and system operation and maintenance. The NRW management plan would need to be accepted along with an understanding of its challenges and advantages through improved awareness and motivation of staff to adopt such strategies. Staff members need to be trained adequately so that they have hands-on experience with such strategies and can sustain the efforts of keeping NRW at acceptable levels in the long run. This was kept in mind while designing the NRW reduction programs in Bangalore and Haiphong. In Bangalore, particularly, Phase II of the project focused in part on training utility staff for specializing in NRW management such that they could control the system once the pilot project was over. Asset management: Although it is not a specific action related to NRW reduction programs, an adequate asset management plan would also need to be maintained by staff as it is a very useful tool to help maintain NRW at the desired level by triggering all the rehabilitation and renewal actions required to keep the assets in normal working condition. Such a plan would also help in making sure that network rehabilitation is being undertaken in an economical manner. This is important since many times the piped network may be very old and damaged and may also not be designed to take into account management aspects and revenue collection practices for the provider, especially in the absence of metering practices, missing network maps, and so on. 19 A periodic and systematic monitoring procedure must be in place to ensure that performance standards and targets are being met within the specified timeframes. Monitoring Table 3: Performance Indicators for Water Loss Management Target Component Type Basic Performance Indicator Detailed Performance Indicator NRW Levels Nonrevenue Financial Volume of NRW as % of Value of NRW as % of water system input volume cost of running system The first step of any follow-up strategy Real losses Water Volume of real losses as % is to implement a periodic and resources of system input volume systematic monitoring procedure. This Real losses System Liters/service connection/day The Infrastructure operational [For systems with 20 or more Leakage Index = ratio comprises reading of all bulk, district, services/km of mains] of Current Annual Real and customer meters at least once a Losses/Unavoidable Use m3/km mains/day Annual Real Losses month and calculating the NRW for [For systems with fewer than (see Box 12 for details) each zone in which the system is 20 services/km of mains] divided (ideally District Metered Areas). Apparent losses Operational m3/service connection/ In all three case studies explored in year this note, regular monitoring was Operational m3/service connection/year Water losses undertaken to ensure that performance standards and targets were being met within the specified timeframe. This is Source: Manual of Best Practice (PIs for Water Supply Services), IWA. 20 Performance Improvement Performance Planning: Improvement Designing an Planning for Effective Leakage Upgrading Reduction Urban Waterand Management Program Services specially demonstrated in the Haiphong Box 12: The Infrastructure Leakage Index case where monthly ward level meetings were held for reporting and The Infrastructure Leakage Index21 addressing community water supply Pressure measures how effectively a utility or Management service delivery needs as well as for water service provider is managing providing feedback on the ward’s its distribution network for Speed and Active performance as per the specific service controlling real losses at current UARL Quality of Leakage standards that were set. Providers operating pressure levels. However, Repair CARL Control need to find appropriate NRW this does not imply that pressure performance indicators (see Table 3 management is optimal, and it may Pipelines Assets and Box 12) that could be monitored be possible to reduce the volume of Management and evaluated on a regular basis. real losses (but not the Infrastructure Leakage Index) by improved active Suitable indicators need to be drawn pressure management. It is a up for monitoring all components of measure of how well repairs, pipelines and asset management and active water loss. The use of various leakage control are controlled, as indicated in the diagram alongside. performance indicators as opposed to using only one percentage indicator for Infrastructure Leakage Index is defined as the ratio of Current Annual volume of Real Losses (CARL) to Unavoidable Annual Real Losses (UARL). While this is an NRW allows water providers to properly indicator with no units and thus facilitates comparisons between providers using baseline, track and target, various different measurement units, it requires attention when calculating Unavoidable components of water loss including Annual Real Losses, computed as: financial, operational and water resources aspects. UARL (liters/day) = (18 x Lm + 0.8 x Nc + 25 x Lp) x P where Lm = mains length (km); Nc = number of service connections; The second step would be to prepare a Lp = total length of private pipe, property boundary to customer meter (km); P table for comparing the different zones = average pressure (m). or District Metered Areas and prioritizing future actions. Many service The length of mains and number of service connections are usually known, but the distance between the property line and the meter may not be providers that have been successful in available. Customer meters are usually located close to the property line and reducing NRW have a team looking hence ‘Lp’ is 0; for the remaining cases, the average and total length of after service quality, NRW, billing, and underground pipe from the property line to customer meters could be collection for each District Metered estimated by inspecting a small random sample of connections. Area. Usually, there would be a monthly meeting where management and team Source: Best Management Practice 3: ‘System Water Audits and Leak Detection’, Review and leaders would discuss the success and Recommendations for Change, California Urban Water Conservation Council, Thornton International, failure stories, derive lessons and best April 2005. practices, and award prices for successful teams. that District Metered Area. Once policies to be reviewed periodically approved by management, it will be relate to network management, pumps, These practices create a sound implemented and, later on, it will be reservoirs and valve operations, competitive environment and lead all assessed regarding its actual cost and construction materials and teams to come up with their own ideas effectiveness. In broader terms, the specifications, rehabilitation and about what to do in their own District policies and processes of producing maintenance practices and connection Metered Area to improve NRW levels, and delivering water should be of new customers, especially those that how much supply they need and what reviewed and rethought about, in case may have difficulties paying the full cost their target NRW could be. The there is scope for improvement. Some of the new connection. proposed actions would be assessed using a cost benefit approach, 21 This index is one of the most recent performance indicators for NRW and was designed at the IWA Leakage prioritized and presented as the plan for Conference in Cyprus, Liemberger, 2002. 21 Any successful nonrevenue water management program will need to address technical issues within the overall institutional, organizational, and managerial environment, if it is to remain sustainable in the long run. Conclusion result of sporadic and irregular technical exercises to reduce physical For developing an efficient strategy for losses. Such programs should be a NRW management, it is hence key to continuous effort and must control gain a better understanding of the commercial losses since the latter reasons for NRW (as analyzed through helps improve the revenue stream of a water balance) and the factors that the water company almost immediately. influence its various components. Then In the longer term, the effectiveness techniques and procedures can be of NRW programs is a function developed to suit specific local of managerial efficiency and characteristics of the network, the institutional accountability. consumers and the provider, to Technical solutions are generally not address and control each of the loss easy to implement, since the network components. As discussed through the may be very old and damaged, with course of the field note, planning and many illegal connections and high NRW implementing an NRW reduction levels. The network may also not be strategy requires a diagnostic approach designed to take into account to understand and estimate how much management aspects and revenue is being lost, where and why is it collection practices of the provider happening, how to reduce losses and such as an absence of metering (bulk improve performance and how to or consumption), missing network sustain such a strategy (as detailed maps, and so on. Hence, while in Table 4). technical solutions are essential and All three case studies demonstrate that may be time consuming and not easily successful leakage reduction is not a result in quick successes, their long Table 4: Designing a Nonrevenue Water Management Strategy Key Questions Techniques How much is being lost? Water audit: Measure components, check production or consumption, recalculate Measure components water balance, review records, operating procedures, skills Where is it happening? Pilot studies: Quantify total losses, that is, how much the leakage is in the distribution Quantify leakage network, transmission mains and reservoirs and how much is non-physical Quantify apparent losses loss; refine the water balance calculation Why is water being lost? Review of network operating practices: Investigate reasons for loss, that is, old/corroded pipes and fittings, poor practices, poor quality assurance, local influences as well as cultural, financial, social, and political factors How can performance be improved? Development of an action plan: Update records systems, introduce zoning/District Design a strategy and action plan Metered Areas; monitor water leakage; prioritize areas; address nonphysical losses; detect and locate leaks; initiate repair/rehabilitation policy, hydraulic modeling, develop geographic information systems How can the strategy be maintained? Training/awareness: Improve awareness and increase motivation; train staff with hands-on experience; monitor the loss management program; implement asset management systems : Adapted from Leakage Management and Control: A Best Practice Training Manual, 2001. WHO. Source: 22 Performance Improvement Performance Planning: Improvement Designing an Planning for Effective Leakage Upgrading Reduction Urban Waterand Management Program Services References Bangalore Water Supply and Sewerage Board and Jamshedpur Utilities and Services Company Limited. Various internal reports and documents. Coffee, Joyce Elena. April 21, 1999. Innovations in Municipal Service Delivery: The Case of Vietnam’s Haiphong Water Supply Company. Department of Urban Studies and Planning, Massachusetts Institute of Technology. Farley, M., and R. Liemberger. Developing a Nonrevenue Water Reduction Strategy; Part 1: Investigating and Assessing Water Losses. Farley, M., and R. Liemberger. Developing a Nonrevenue Water Reduction Strategy; Part 2: Planning and Implementing the Strategy. Haiphong Water Supply Company. Modes of Engagement with Public Sector in WSS in Developing Countries: Case Study. Haiphong, Vietnam. term sustainability depends on effective enables tracking whether target NRW institutions and finances. Technical levels are being maintained or not. Kingdom, Bill, Roland Liemberger, and solutions, thus, ultimately have to be Selecting the most appropriate Philippe Marin. December 2006. The commercially feasible and should be approach for NRW management will Challenge of Reducing Non-Revenue planned for, such as proactive and depend on the level of leakage, Water (NRW) in Developing Countries robust metering plans, checking for the cost of leakage, and the How the Private Sector Can Help: unauthorized connections, unbilled cost-effectiveness of each method. A Look at Performance-Based Service quantities, and volumes of free water. Contracting. Water Supply And Reducing NRW is achievable but it Sanitation Sector Board Discussion Any NRW management program will remains challenging because the Paper Series, Paper No. 8. therefore need to address technical approach to reducing and managing issues and become part of the culture NRW goes beyond technical solutions. Luy, D. X. April 2000. Working with within the overall institutional, Although it is not feasible to eliminate all Communities to Improve Water Supply organizational, and managerial Services in Haiphong, Vietnam. NRW in a water utility, reducing it to Presentation at the WB-Urban Forum. environment if it is to remain efficient levels will be required to bring sustainable in the long run. It will need about some quick performance Thu, Tran Minh Anh, and Dam Xuan to also build relevant capacity so that improvements in terms of both Luy. 1998. Delivering Water Services at local staff can keep the program going increased cash flows and improved the Local Level in Vietnam. 24th WEDC and, at the same time, develop an services, that is, more water available Conference, Sanitation and Water for effective monitoring system that to serve consumers. All, Islamabad, Pakistan. 23 Water and Sanitation Program- South Asia World Bank 55 Lodi Estate New Delhi 110 003 India Phone: (91-11) 24690488, 24690489 Fax: (91-11) 24628250 E-mail: wspsa@worldbank.org Web site: www.wsp.org ABOUT THE SERIES April 2008 WSP Field Notes describe and WSP MISSION: To help the poor gain sustained access analyze projects and activities in to water and sanitation services. water and sanitation that provide lessons for sector leaders, WSP FUNDING PARTNERS: administrators, and individuals The Governments of Australia, Austria, tackling the water and sanitation Belgium, Canada, Denmark, France, Ireland, Luxembourg, the Netherlands, Norway, challenges in urban and rural areas. World Bank. June 2002. Analytical Sweden, Switzerland, the United Kingdom, the The criteria for selection of stories Advisory Activities, Benchmarking the United States of America; the United Nations included in this series are large-scale Urban Water Sector. Vietnam, Hanoi. Development Programme, The World Bank, impact, demonstrable sustainability, and the Bill and Melinda Gates Foundation. World Bank. Report No. 16299-VN. good cost recovery, replicable May 20, 1997. Staff Appraisal Report AusAID provides WSP-SA conditions, and leadership. Socialist Republic of Vietnam, Water programmatic support. Supply Project. Infrastructure Operations ACKNOWLEDGMENTS: Division Country Department I, East Asia This field note was peer reviewed by Trung, Do Quang, R. Snow, L. Doukas, and Pacific Region. Mario Alejandro Suardi, Cyril Wear, N. Thanh, and N. Trung. 1998. Water- Chris Heymans, Mathew Kurian, World Bank. Report No: 29128-VN. Loss Reduction Program in Vietnam. and Vandana Mehra November 22, 2004. Project Appraisal 24th WEDC Conference, Sanitation and Document on a Proposed Credit in the TASK MANAGER AND AUTHOR: Water for All, Islamabad, Pakistan. Amount of SDR 75.20 Million Pronita Chakrabarti Agrawal Water Loss Group: IWA Task Force. (US$112.64 Million Equivalent) to the BACKGROUND RESEARCH: Best Practice Performance Indicators Socialist Republic of Vietnam for the Pronita Chakrabarti Agrawal for Nonrevenue Water and Urban Water Supply Development (research carried out in 2005 and 2006) Water Loss Components: A Project. Urban Sector Development Practical Approach. Unit, East Asia and Pacific Region. Editor: Anjali Sen Gupta The findings, interpretations, and conclusions expressed are entirely those of the author and Pictures by: Sajid Darokhan should not be attributed in any manner to The World Bank, to its affiliated organizations, or to Created by: Write Media members of its Board of Executive Directors or the companies they represent. Printed at: Thomson Press (India) Ltd