Performance Partnering and Key Performance Indicators (KPIs) - A UK Perspective

Abstract

A key feature following the privatisation of Water Companies in the UK in 1989 was the emergence of Framework Contractors and Consultants who would provide services to their Utility clients. Many of the Water Companies established a series of Performance Partners which are typically reviewed every 5 years to match the investment cycles. This paper identifies the development of collaborative working within the UK Water Sector and highlights the various trends and models employed. Simple project specific partnering arrangements, utilising a multitude of Key Performance Indicators (KPI's) have been replaced with Framework and Alliance arrangements whereby the KPI's are more strategic and compliment incentivisation mechanisms. The main objectives of these new arrangements are to generate competition and deliver significant efficiency gains to the Client and provide further opportunities to their respective partners. In addition the paper examines the key challenges and benefits of performance partnering on the various stakeholders and the change in behaviour and attitudes this has generated. THE UK MARKETSince privatisation in 1989, the UK water industry has undertaken its business planning in 5-year cycles, each referred to as an Asset Management Plan (AMP). Prior to each AMP cycle the water companies are required to submit a business plan to the industry regulator Office of Water Services (OFWAT). The business plan sets out the company's estimates of its costs and OFWAT uses this to determine the maximum charges that the company can make to its customers over each year of the AMP. This is OFWAT's Periodic Review of Prices. Prices are thus set at levels which ensure that revenues are sufficient to cover the direct costs of the works which will take place.The overall performance assessment (OPA) is a method OFWAT use to measure and incentivise water company performance across the broad range of services provided to consumers and the environment. It allows OFWAT to compare the quality of the overall service, and informs consumers and other interested parties about how their local water company has performed relative to other companies. The OPA also incentivises companies to improve and maintain services relative to each other by taking into account their relative performance when price limits are set. Effectively, WEFTEC 2009

Improvement of the Key Performance Indicators (KPIs) and Evaluation of Challenges

“…To identify the various experiences in BS, essential guidelines and standards have to be considered by researchers in [6]. Three various primary sources have been evaluated in literature to define the external basis for BS benchmarking: EN-13816 standard; EQUIP project analysis and EN-13816 quality assurance approach to satisfy the needs of consumers.…”