For discussion
EC(96-97)70
on 26 February 1997

ITEM FOR ESTABLISHMENT SUBCOMMITTEE OF FINANCE COMMITTEE

HEAD 194 - WATER SUPPLIES DEPARTMENT

Subhead 001 Salaries

Members are invited to recommend to Finance Committee the retention of the following two supernumerary posts for a period of one year -

1 Assistant Director of Water Supplies
(D2) ($102,900 - $109,250)

1 Chief Engineer
(D1) ($86,650 - $91,950)

PROBLEM

The Director of Water Supplies (DWS) needs the continued support of a dedicated project team to continue to implement measures aimed at improving the efficiency and effectiveness of his department and to manage the changes.

PROPOSAL

2. DWS proposes to retain two supernumerary posts of one Assistant Director of Water Supplies (ADWS) (D2) and one Chief Engineer (CE) (D1) for one year to continue to see through implementation of the main recommendations of a management review and its follow up studies.

JUSTIFICATION

3. On 9 February 1996, Finance Committee approved the retention of two supernumerary posts of one ADWS and one CE to head an efficiency project team to follow up in detail the recommendations of a management review of WSD. They include defining more closely the scope of individual proposals, carrying out cost-benefit analyses and drawing up implementation plans.

4. Upon completion of the detailed studies in October 1996, the project team put forward 23 major recommendations under six improvement areas, to be implemented between December 1996 and March 1999. DWS has implemented some of the improvement recommendations. They included improving the efficiency in dealing with consumers' complaints, improving the cost-effectiveness of seepage inspections, speeding up the data capturing process of electricity bills, enhancing vehicle utilization, reducing the vehicle maintenance costs and down time, and closely monitoring the implementation of the computerised Supervisory Control and Data Acquisition systems. Apart from service improvements, savings of some $7.7 million per year have been achieved. On further work to be done, he has drawn up a detailed implementation workplan at Enclosure 1. On full implementation, we expect to achieve an additional annual saving of $46.6 million. Further savings will arise from implementation of a number of contracting-out initiatives and streamlining the organisation structures.

5. In view of the broad scope of the management review, DWS envisages that some of the recommendations will have significant impacts on various department-wide issues such as policy, financial, organisational culture, operational practices as well as staff relations. To ensure smooth implementation and to enable early achievement of the identified efficiency improvements and savings, DWS considers it essential to retain the existing project team, headed by one ADWS and one CE, to maintain the momentum of the implementation work. The team will focus on the following tasks -

(i)

to implement the remaining improvement items outlined in the implementation workplan;



(ii)

to formulate a comprehensive staff relations strategy in implementing the cost saving initiatives;



(iii)

to determine practical performance measurement and provide suitable performance indicators on economy aspect;



(iv)

to co-ordinate implementation of a number of contracting-out initiatives, including plant cleaning, sub-main repair, meter repair, drafting service and minor civil maintenance work;



(v)

to develop a comprehensive human resource management plan for WSD; and



(vi)

to oversee the consultants in carrying out the underground asset management study and the digitisation of watermain record plan, both being part of the Asset Management Study included under the management review.

6. The ADWS will continue to lead the project team in tackling the above tasks. He will co-ordinate efforts towards implementation of the improvement initiatives and ensure that a consistent approach is adopted towards fulfilling the department's goal. In so doing, he will work closely with the functional branch heads, ranked at the D2 level, particularly in respect of rationalisation of their resources as the efficiency initiatives take effect.

7. The CE will assist the ADWS in carrying out the tasks in question. In particular, he will take direct charge of implementation of the contracting-out initiatives such as examination of cost comparisons to prioritise the initiatives, exploring various alternatives available in the market, evaluation of tendering documents and evaluation of the performance and cost-effectiveness of contracting-out works. He will also develop suitable performance indicators for more effective performance measurement.

8. DWS has currently redeployed one SE to assist the project team. He will continue to redeploy supporting staff for the team as necessary from other areas within the department. When the main implementation work is completed in about a year's time, the Assistant Director of Accounting Services heading the Financial Management Branch and other branch heads of the department will take up the remaining tasks. The organisation chart of WSD and the job descriptions for the two posts of ADWS and CE are at Enclosures 2,3 and4 respectively.

FINANCIAL IMPLICATIONS

9. The additional notional annual salary cost of this proposal at mid-point is $2,343,600. The full annual average staff cost of the proposal, including salaries and staff on-cost, is $4,023,984. There are no other additional staffing and financial implications. We have included sufficient provision in the 1996-97 Estimates and the 1997-98 draft Estimates to meet the cost of this proposal.

10. This proposal will have no impact on fees and charges since the funding required will be met from savings.

BACKGROUND INFORMATION

11. In February 1995, a study team in WSD, assisted by the Efficiency Unit and the Management Services Agency and guided by a Steering Committee chaired by the Secretary for Works, commenced a management review aimed at identifying measures to help improve the department's efficiency and effectiveness.

12. The management review included an Asset Management Study which will provide a strategy for asset maintenance, enhancement and replacement in order to bring WSD's operating services to a level comparable to that of relevant utilities in the private sector. On 17 November 1995, Finance Committee approved a commitment of $30 million for engaging consultants to carry out the two core projects of the Asset Management Study, namely a study of the underground assets of WSD and the digitisation of water mains records. The consultants will complete the former by July 1997 and the latter by October 1998.

13. We created two supernumerary posts of one ADWS and one CE under delegated authority on 1 September 1995 for a period of six months to form a project team to follow up in detail on the recommendations of the management review. On 9 February 1996, Finance Committee approved the retention of the two posts for a period of one year commencing 1 March 1996.

CIVIL SERVICE BRANCH COMMENTS

14. The Civil Service Branch considers the ranking and grading of the proposed posts appropriate, having regard to the responsibilities and professional input required.

ADVICE OF THE STANDING COMMITTEE ON DIRECTORATE SALARIES AND CONDITIONS OF SERVICE

15. As the two posts of one ADWS and one CE are proposed on a supernumerary basis, their retention, if approved, will be reported to the Standing Committee on Directorate Salaries and Conditions of Service in accordance with the agreed procedure.

Works Branch
February 1997
(E5628/P.1-P.5/WIN99)

Enclosure 1 to EC (96-97)70

Workplan for Implementation of Improvement Recommendations

Recommendation

Potential Savings

($M/yr)

Target

Completion

Date

A. Improving working practices and utilization of staff resources

A1. Explore the feasibility of replacing the turfed surface of service reservoirs with other materials of low maintenance costs.

1.0

August 1998

A2. Adopt the Multi-skill Service and Emergency Team arrangement in dealing with watermains emergency and consumer complaints.

3.0

February 1999

A3. Review the practical need for resealing water meters.

0.7

March 1997

A4. Improve operation, staffing and telephone facilities of the Technical Complaint Centres.

0.2

March 1999

B. Enhancing efficiency in the transportation of work gangs to work sites



B.1 Introduce measures to improve the transportation to work sites

14.0

February 1999

B.2 Introduce measures to reduce long travelling time of work gangs

0.5

March 1999

B.3 Pursue wider use of self-drive arrangement.

20.0

February 1999

B.4 Rationalize the driver performance appraisal system

[Indirectly improve the productivity of the works teams]

March 1997

C.Establishing better staff and job management and performance measurement/monitoring systems.



C.1 Introduce job planning and management system for site inspection work

[To be assessed]

March 1997

C.2 Review established performance standards in use and set up proper performance monitoring systems.

[To be assessed]

June 1997

C.3 Set up systems to review standard time for planned mechanical & electrical maintenance work.

[To be assessed]

February 1998

C.4 Review standard output of the repair of water meters.

0.7

June 1997

D.Contracting out operational and maintenance activities to effect cost savings



D1. Take forward the remaining tasks of the contracting-out initiatives.

[To be assessed after sourcing for service suppliers]

February 1998

D2. Consider contracting-out transport services if the self-drive option is found infeasible.

[The potential saving is 4.1/yr, pending outcome of the attempt on the self-drive option ]

to be determined

E.Streamlining the organisation structure



E1. Streamlining the organisation structure of the operation and maintenance sections.

[To be assessed after conducting the organisation review]

February 1998

F. Using advanced technology, and communication facilities to improve efficiency



F1. Adopt greater use of information technology in transport management

0.1

December 1997

F2. Draw up plan to provide information technology/ communication facilities for new regional depots

[This item is aimed at service improvement rather than cost savings]

February 1998

F3. Monitor the progress of automation and use of Supervisory Control and Data Acquisition systems in the treatment works and pumping stations and realize benefits.

6.4

February 1998

Total potential savings :

(at 1995-96 price level)

46.6

March 1999

Enclosure 3 to EC(96-97)70

Job Description

Assistant Director/Efficiency & Management

Rank : Assistant Director of Water Supplies (D2)

Main Duties and Responsibilities

Responsible to the Deputy Director of Water Supplies for -

1. co-ordinating efforts towards implementation of the improvement initiatives and ensuring that a consistent approach is adopted towards the department’s goal;

2. negotiating with the various branch heads in the rationalisation of their resources as the efficiency initiatives take effect;

3. formulating a comprehensive staff relations strategy in the implementation of the cost saving initiatives in particular those having a significant impact on staff.

4. formulating an overall financial strategy taking into account all cost-saving initiatives;

5. developing a comprehensive human resource management plan for the Department;

6. working out with the Civil Services Branch a feasible way forward for taking full benefit of the self-driving arrangement; and

7. maintaining centralised control of all efficiency initiatives and reporting to DWS and the Secretary for Works the progress of implementation of these initiatives.

Enclosure 4 to EC(96-97)70
Job Description
Chief Engineer/Efficiency & Management

Rank : Chief Engineer (D1)
Main Duties and Responsibilities

Responsible to the Assistant Director/Efficiency & Management (AD/EM) for -

1. assisting AD/EM in taking forward 18 recommendations arising from the review on transport and related issues, operational arrangements and overtime work;

2. completing assessment of in-house staff cost for works projects, sourcing for alternative service providers, conducting contracting-out trials and implementing contracting-out initiatives;

3. developing practical performance measurement and providing suitable performance indicators on economy aspect;

4. completing the compilation of a departmental plan that incorporates all the above initiatives;

5. overseeing the consultants in carrying out the underground asset management study and the digitisation of watermain record plan both being part of the Asset Management Study;

6. liaising with WSD divisions and staff groups to facilitate implementation of the changes; and

7. assisting AD/EM in formulating an overall financial strategy taking into account all cost - saving initiatives.

(E5628/P.1-P.11/WIN99)

Last Updated on 12 August 1999