June 2004 · Volume 86 · Number 5

The Phoenix Approach to Public Water Utility Challenges

by Michael Gritzuk
The challenges facing Phoenix, Arizona, and many other public water utilities of all sizes in this early part of the 21st century are plentiful. Customer service issues, new environmental regulations, cost cutting, and maintaining low rates are common concerns for public water utilities. But at the city of Phoenix Water Services Department (WSD), the philosophy for facing these challenges is a progressive, sure-footed strategy. 
Phoenix WSD is continuously achieving more cost-effective operations and always looking for ways to be more responsive to customers’ needs. It has developed programs that help maintain environmental excellence, and with an eye to the tragic events of 9/11, it has made a significant priority of focusing on security to protect the water infrastructure and its customers. 
Challenges
Our department’s challenges in facing the problems of this century began near the end of the 20th century, before we really knew just how difficult the future would be. First, in 1997, the department embarked upon a reengineering program with the chief goals of enhancing customer service, operations, and water quality while saving costs wherever possible. Basically, it would be a program to achieve best-in-class operations in all the functions performed. 
To meet these high objectives, the department first forged a partnership between management and labor and formed a committee, made up of equal numbers of members from each constituency, that would oversee the entire process. Then, the department hired consultants to assist the staff of the water production and wastewater treatment divisions—the two in which national competition and change in operational and management philosophy are most transforming the industry. 
The consultants directed staff to formulate suggestions that would change the way WSD does business. Prior to reengineering, as is typical in the water industry, maintenance and operations staffs had been separate in classification and duties, and there had been little cross-training.
Water administration staff, in partnership with labor, then directed the process of setting up a new classification that would not only combine the duties of these classifications but also enable a new career and incentive program and a new way of compensating these employees. Instead of the traditional method, it was decided to use a multiskilled performance program and pay plan. 
The multiskilled plan, made up of nine basic skill blocks—three levels of three skills per level—must be navigated by the employee who holds the classification of operations and maintenance technician (O&M tech) in order to receive higher levels of compensation.
All new employees must acquire at least one operation and one maintenance skill block within the first 12 months of employment. This ensures that new employees are given a broad band of skills, so they can become useful more quickly than in the old mode of training, which was in a single discipline and only occurred when time allowed.
Once beyond these first 12 months, the career path in this job classification becomes self-directed. The department and the city rewards employees for expanding their skills and certification and becoming more valuable to the operation. 
This multiskilled program is currently unique to Phoenix, and after several years of implementation, it is proving to be what it was designed to be: an enabler that will alter the culture of the workforce, raise efficiency, and cut costs in the department’s chief operational divisions. 
Where employees once frequently had to monitor water quality manually, technology now automatically performs the monitoring while staff ensures that the technology functions correctly.
The much more efficient multiskilled program allows the department to reduce the staffing at each facility, which has been achieved through attrition, not layoffs. The amount of supervision has been reduced too, also through attrition. For work management, technology in the form of a computerized maintenance management system (CMMS) has been implemented as an enabler to change the structure of how work is prioritized, delegated, and accounted for.
Technology was implemented, too, in many areas associated with maintaining and enhancing water quality. The department established a new standard of environmental excellence. As part of that policy, state-of-the-art technology and automation was incorporated to enhance all aspects of regulatory compliance, from new equipment to help test samples at laboratories, to pollutant monitoring equipment used to evaluate wastewater discharges from industrial and commercial customers, to new computer systems used to collect compliance data.
Where employees once frequently had to monitor water quality manually, technology now automatically performs the monitoring while staff ensures that the technology functions correctly. 
Workplace regulatory compliance and safety have been enhanced to ensure adherence to the greater number of environmental and regulatory requirements. A group of employees was formed to monitor environmental health and safety at each main facility. These employees ensure compliance with all regulatory requirements and see that proper safety steps are being taken in performing day-to-day tasks at the facilities.
Higher Goals
To achieve all goals, a departmental training program has been set up that will encompass a wide range of topics and skills, all chosen to help employees meet their career goals and the department’s objectives. 
One philosophical change that has emerged from the reengineering program is that employees have been empowered to look at improved ways of doing things. When the department had to construct new solids-handling facilities at three of its water treatment plants, for example, the new facilities originally were going to require that significant additional staff be brought on board. But with the new O&M tech concept in place, and with the facilities designed with greater automation, no additional staff were required.
The same was true for a water reclamation facility that was completed in 2000. Originally, it was going to require some 30 employees to operate it, but with the enhanced automation, it only required six full-time employees. 
Other reengineering steps have been taken in the department’s customer services division. A consultant performed an activity-based costing analysis on all activities performed in the division, along with surveying the same type of activity at privately held utilities and other public utilities to develop a best-in-class benchmark for comparison.
The results of this survey and activity-based costing proved that changes would be needed in customer services operations to reach the best-in-class goal. And, as with the other phase of the reengineering program being conducted at the water and wastewater treatment facilities, a higher goal of improving customer service and enhancing the operation would be the key to success. 
Methods of improving operations and customer service and cutting costs would be achieved through the employees’ efforts. Once again, employees were given the power by management and labor of finding methods to achieve improvements. Employees recommended that the job duties and job classifications of meter readers and field representatives be fully analyzed and possibly restructured, with the goal of reducing duplication of work and of visits to customers to resolve issues.
Employees made suggestions to improve communications between the central and field offices. One solution to the communications issue was achieved by implementating cellular/radio communication devices that would replace outdated two-way radio systems.
Compliance, Safety, and Security
Although much has been accomplished in the department’s reengineering program, it has not yet been completed. Currently, the department is looking at combining the functions of those wastewater collection and water distribution divisions that maintain the sewer and water lines.
To date, these reengineering efforts have achieved significantly higher levels of excellence and customer service and have saved more than $77 million. With these savings, the department knew, it could keep water-rate increases well below the double-digit range. The average annual rate increases in Phoenix for the last seven years have been as low as 2 percent for water or sewer service, despite the fact that during the same time, the five-year capital improvement program has grown from $700 million to $1.3 billion.
Reengineering savings also have created an economic buffer to aid in implementing new U.S. Environmental Protection Agency regulations regarding the lowering of arsenic concentration, which comes mostly from groundwater. Phoenix has slightly more than 20 wells that will not meet the new standard, which goes into effect in January 2006. The goal is to construct new infrastructure at each of the well sites that will remove arsenic to a level below the new standard.
The first arsenic treatment facility, which has recently been completed at a well site, is the first permanently installed, full-scale arsenic removal facility in the United States. The estimated cost of bringing all wells into full compliance with the new standard is $23 million. 
In a post–9/11 world, WSD has been confronted with additional financial challenges. The reengineering savings will also be used for security enhancement projects that have quickly been moved to the front burner. The department had a security program, but 9/11 proved that security would have to be far more advanced and sophisticated to protect the city’s facilities and customers from potentially disastrous events. 
The department began by enhancing security patrols at all the treatment facilities, then performing a vulnerability assessment on all of its facilities within the vast, 500-plus-square-mile service area, as well as some facilities located outside that service area that serve other communities. So far, this has resulted in a number of physical, personnel-based, knowledge-based, and customized security enhancements, without a major rate impact on customers.
Now, the department is in the beginning stages of developing an environmental management system (EMS) that will encompass all of the department’s compliance, safety, and security issues, and we are collaborating with regulators to help them understand our compliance programs and how we can better work together to achieve and maintain regulatory excellence. 
It might be said that we have faced our challenges successfully because of our size as a utility. Although our size gave us much leverage in getting funding for projects, it still took the ideas and determination of dedicated and talented staff to implement the programs that have allowed bigger successes to blossom. 
In the Phoenix Water Services Department, we feel that it’s important to know where we stand with our peers and with all of our stakeholders. But it is equally important to reevaluate and assess ourselves constantly to improve the quality of the entire operation. We have learned that partnering and the ideas of front-line employees, supervisors, and managers have allowed our organization to meet challenges and be more responsive to citizens. 

Michael Gritzuk is director of the water services department, Phoenix, Arizona (michael.gritzuk@phoenix.gov).