Case Study

Name: City of Detroit Water and Sewerage Department Date: 2002 - ongoing Project: Utility Performance Improvement and Rate Reduction Program

Summary: By helping to implement a performance management program and identifying excess operating expenses, IMG aided the Detroit Water and Sewerage Department (DWSD), the third largest water and wastewater utility in the United States, in reducing annual operating expenses while improving process performance.

Issue: Years of management challenges, massive required capital investment, and a shifting economic and demographic base led DWSD to routinely increase rates by double digits as customer perceptions of service quality fell. DWSD Director hired IMG to develop a Utility Performance Improvement and Rate Reduction Program that would address four primary objectives: 1) improve customer perception, 2) reduce costs (both operational and capital) and stabilize rates, 3) maintain regulatory compliance, and 4) invest in DWSD’s employees.

Solution: IMG established Customer-Driven Performance Measures for the entire organization of twenty-two divisions, resulting in increased employee accountability and motivation, as well as giving managers the data they needed to make decisions and measure performance. IMG identified numerous opportunities to cut operating expenses, such as reducing departmental overtime, improving productivity to decrease the need for outside contractors, optimizing the capital program, refinancing DWSD’s debt, collecting on delinquent commercial accounts, and selling excess fleet vehicles.

Value Created: Annual DWSD rate increases have dropped from double digits to an average of 3.5% in 2005, while controllable operating expenses have been reduced by over $65 million. Each month IMG produces an updated set of performance metrics that contains over 165 Key Performance Indicators (KPIs) from various departments within DWSD. These KPIs provide needed information to managers, serving as the basis for management decisions and continued business process optimization. As a result of the KPI success, a subset of the performance measures has been instituted in the Mayor’s office as part of a City-wide performance initiative known as CitiTrak.