Introduction

This manual aims to provide a guide for water utilities on why and how to benchmark. And while presenting the key concepts and clarifying some of the industry's misconceptions is inevitable, a great effort has been made to provide a practical reference with examples and applicable knowledge obtained first hand from some of the key benchmarking initiatives in the water industry around the world.

The text reflects the work of the IWA benchmarking task group, which was created with the purpose of continuing on previous works on performance indicators and benchmarking, and producing this manual to facilitate the understanding of all those benchmarking worldwide, and provide valuable knowledge to those wanting to benchmark.

1.1 WHAT IS BENCHMARKING?

Most benchmarking books written in the past twenty years have tried to answer this question on their first pages. After all benchmarking is a complex concept and a good book should try to interest the reader from the beginning laying out the topic clearly and concisely.

This has resulted in a handful of different ways to describe benchmarking. However, the truth is that with very few exceptions, those books had an easier task than this one you are holding right now, for they were rarely addressed to the water industry. This should not be taken to mean that benchmarking is any different when applied to a water utility than to a manufacturing company. It is not. But after a decade and a half of sometimes confusing terminology, water professionals may have a harder time with benchmarking concepts than the average reader (Cabrera et al., 2009a).

One of the main aims of this manual is to try to provide clear definitions and a single benchmarking language for the water industry. A task posing a challenge even greater than describing benchmarking in a single phrase:

The careful choice of words aims to capture in a single sentence a broad concept. And key to that concept is the idea that benchmarking is simply a tool. A powerful tool that is especially suited for the water industry, but in no way an end in itself. Benchmarking without a clear goal will often lead to disappointment and waste of resources.

Another cornerstone of the benchmarking concept is captured by the word systematic. Benchmarking techniques should always be aimed at continuous improvement. As a matter of fact, benchmarking fits especially well in the PDCA (Plan, Do, Check, Act) concept and should always be approached with those four stages in mind. As a natural consequence, benchmarking should derive in any organization in a natural tendency towards continuous improvement.

However benchmarking is anything but a "do it yourself" concept. The search for leading practices implies that lessons need to be learnt from others, hopefully from the best in class. But as much as benchmarking is about looking outside, it is also an exercise of looking within and learning how things are done internally. It is only from that inner knowledge and the understanding of how others (the best) do things, that improvement can be achieved.

An obvious factor to that success is understanding the concepts of best practices and best in class. Those words are often quoted in the literature pointing to iconic case studies and world-class companies as references in certain processes. While it is true that those organizations constitute a clear reference, benchmarking is not limited to industry leaders and large organizations. And as a matter of fact, some of the benchmarking projects undertaken lately by water utilities show that lessons can be learnt from almost anyone, and that being able to identify the best practices and those who have developed them is a key factor to success.

The truth is that to find out whom the best in class is, measurements need to be made. However, and despite the very extended notion that benchmarking, or some type of benchmarking, is achieved by comparing metrics, it should be made very clear that creating a bar graph with a numerical comparison of several utilities is not benchmarking. Even the original definition of "metric benchmarking" (which will be reviewed later in this chapter) considered it to be much more than the comparison of a few indicators. The benchmarking concept has always encompassed a systematic process and the will for continuous improvement.

The consequences of continuous benchmarking efforts in a utility are often reflected in a more mature organization which is more transparent and understands better how things are done, which things need to and could be improved and what it takes to improve them.

1.2 BENCHMARKING: METRIC, PROCESS OR NONE?

Even from the early days, the water industry was quite fast in reacting to a new management tool called benchmarking. It was the early 90s, and the echoes from Harvard had already been made available to the general public in what many considered the first mainstream publication on the topic (Camp, 1989). From the very beginning, benchmarking was seen as a tool that, in the absence of efficiency stimulating incentives, could help water companies in their search for excellence.

The aim of benchmarking was to identify those who were best in their class, and once the best practices had been identified, they were to be adapted in search of better performance. Robert Camp had been working at Xerox in difficult times when the only option for the company was to learn from the best (their Japanese colleagues at Fuji-Xerox) and improve their practices.

However, those were also the days of the dawn of the Office of Water Services (OFWAT). Regulation was introduced in England and Wales in 1989 following the privatization of the water sector. Yardstick competition (the use of metrics to compare the performance of the different water companies) was soon chosen as a key regulatory tool. Such artificial competition was to compensate for the lack of a real market tension between water companies, and therefore drive them to improve performance.

It is hardly surprising, that when the AWWA Research Foundation issued a report on benchmarking (Kingdom and Knapp, 1996) the universe described for water utilities was ruled by Xerox benchmarking and the yardstick competition created by OFWAT. However, the language used to describe that universe proved to be far more controversial than the tool itself.

The AwwaRF report, well written and easily understandable, coined the terms metric and process to qualify what had simply been...