The Development of performance measures in the management of water utilities in Sri Lanka

Abstract

The Development of Performance Measures in the Management of Water Utilities in Sri Lanka In developing countries, water utilities bear massive challenges, in supplying pipe-borne water. National Water Supply & Drainage Board (NWSDB), the sole supplier of safe drinking water in Sri Lanka, under the Ministry of City Planning & Water Supply, increased its piped water services to cover 34% of population in 2014. NWSDB’s Corporate Planning Division presents its performance, showing access to safe drinking water, via Annual and Key Performance Indicator (KPI) Reports, using different ratios with eleven variables. Performance is imperative for the betterment of a water utility. Recognizing this fact, the study proposes an alternative way of presenting performance of NWSDB, because single ratios do not provide comprehensive explanations about performance of water utilities. Therefore, this study focused on the productive efficiency concept under parametric approach to estimate technical efficiency using Stochastic Production Frontier (SPF) technique as the best Industry Practice. First, SPF model was proposed for NWSDB. Then, selected regional manager’s centres producing pipe-borne water were analysed using SPF model, to check its inefficiency. The test statistics found that SPF model was an inefficiency model. Finally, NWSDB was analysed using SPF model and overall mean technical inefficiency and technical efficiency were estimated for the period of 2010, 2011, 2012, 2013 and 2014. The SPF model was analysed using maximum likelihood iteration method to estimate the elasticity values of parameters, using the ‘STATA’ software package, specially designed for stochastic frontier models. Study confirmed NWSDB manages a similar technical efficiency level annually. Technical efficiency trend showed the increase occurring at a diminishing rate. Finally, the inefficiency model derived from the SPF model was proposed to NWSDB, which clarified the significance of variables affecting NWSDB’s production, directly or indirectly, to managers etc. This SPF model allowed NWSDB to estimate mean technical efficiency for presenting performance reports as an alternative.