News

Win-Win Contract Operations; Presented by Terry Merrit and Craig Edlund at the MAWWA/MWEA Joint Annual Conference; March 26, 2003

In 1994, the City of Bowling Green entered into a public/private partnership with Alliance Water Resources for the operation and maintenance of its water and wastewater systems. Since that time, additional treatment facilities have been added, additional services included, and the terms of the agreement extended. By combining previously separate workforces, cross-training personnel, and co-utilizing equipment, expertise, and other resources, Alliance has produced significant savings for the City while bringing badly needed improvements to facilities and processes. Details of operational challenges and solutions as well as the impacts and benefits to the former City employees follow.

BACKGROUND PERSPECTIVE
At the time the contract operations partnership began, the City\'s water system consisted of one very old surface water plant, one 250,000-gallon clearwell, and one 250,000-gallon water tower. The wastewater system consisted of a two-cell aerated lagoon with four lift stations.

Since then, the system has been through many changes in response to expanding government regulations as well as an above average population growth rate. At the time Alliance started providing operating services, the City had a population of around 3,000. The last census indicates that the town had grown to nearly 5,200. The water system now includes a 2.0 mgd pulsating up-flow clarifier type water plant (built in 1997), two water towers with a combined capacity of 750,000 gallons, and one 500,000-gallon clearwell.

In the same timeframe that the water improvements were taking place, the wastewater side of things was growing at a similar pace. There are now six lift stations, a two cell aerated lagoon, and a new SBR treatment facility at the correctional center. A treatment plant expansion is currently in design to do away with the lagoon and to expand and improve treatment capabilities.

OPERATIONAL CHALLENGES
The primary operations challenge facing Bowling Green was one that many communities are grappling with: a shortage of qualified professional and technical personnel needed to operate its facilities. While preliminary discussions of the concept of contract operations were taking place between Alliance and the City, changes in key operating personnel suddenly left Bowling Green without the properly licensed operators needed to meet DNR requirements. At the request of the City, Alliance provided interim operations and supervision by drawing on professional and technical expertise from its other operating divisions. After being awarded full responsibility for the operation, Alliance assigned an experienced full time manager and immediately put into place improved work schedules, started formal preventive maintenance programs, and instituted proven operating procedures.

The new Northeast Correctional Center was under construction on the edge of Bowling Green and it needed a new wastewater treatment facility and experts to operate it. With Alliance\'s technical assistance, a new 0.75 mgd sequencing batch reactor (SBR) wastewater treatment facility was completed in 1998 and now effectively treats the total wastewater flow generated by the correctional center. Alliance also developed a biosolids disposal program to serve the new SBR wastewater facilities.

Meanwhile, the City\'s aging water treatment facilities were in need of replacement, but the need for improved and expanded facilities presented budget and administrative challenges. A new two-stage, 2.0 mgd surface-water treatment plant has substantially improved the quality of water produced. Alliance was able to assist the City by reviewing design plans with assistance from the engineers in its corporate offices.

In 2000, the Mayor and the City Administrator asked Alliance to consider assuming responsibility for all public works, including streets, parks, cemetery, and grounds maintenance. Alliance evaluated the public works facilities across the board and responded with a detailed proposal for combining the separate water, wastewater, and public works functions into a single, well-managed workforce. Benefits would include increased cost effectiveness, efficiency, and co-utilization of equipment/resources. Compared with the City\'s budget, Alliance was able to cut out over $60,000 in the first year through cross training and more efficient allocations of employee workloads. The City accepted Alliance\'s proposal.

EMPLOYEE PERSPECTIVES
During the evaluation of whether to add public works to Alliance\'s responsibilities, the City\'s existing staff wrote a letter to the Mayor and City Council supporting the change and thanking them for their new opportunities. Once the measure passed, City public works employees were brought smoothly onto the Alliance team with no loss of jobs. Now cross-trained and working for Alliance full time, the public works crew performs together on projects ranging from line breaks to street repair to snow removal.

As with all Alliance transfer employees, the affected personnel were offered employment at or above their existing wages and benefits package. Alliance\'s benefits package includes health insurance, dental insurance, a retirement/401K plan, life insurance, and short-term and long-term disability insurance as well as an incentive and bonus program for water and wastewater certifications. Transfer employees were credited with their years of service to the City to enable them to qualify for time-sensitive service benefits such as vacation, profit sharing, and 401K plan vesting periods. Transfer employees also had their waiting periods waived for enrollments in health, life, AD&D, and 401K plan profit sharing programs.

Hershel Whitaker is a transfer employee who has seen both sides. Hershel had worked for the City in the street and water/wastewater departments for about eight years. He first had an opportunity to join Alliance when the original contract operations agreement was structured for the water/wastewater department. “Alliance asked me to stay on with them then. But I had seen a lot of City councils change in past years. And I did not want to go with Alliance. My main reason was fear. If Alliance did not stay I would lose my seniority, and not have a job!” Six years later Hershel again got the opportunity to join Alliance as part of the public works crew and took it. “Alliance…made us a good offer! Since then it has been an honor to work for Alliance. I believe they are a fair and family oriented company. Today, I have no fear of Alliance!”

Boyd Haddock, Mayor of Bowling Green, has similar sentiments. “…We have been very impressed with their professionalism and ability to get the job done. Therefore I would highly recommend Alliance to any municipality seeking this type of service.”

THE ALLIANCE MANAGEMENT MODEL
How did Alliance help Bowling Green deal with its staffing and growth challenges efficiently and cost effectively? Contract operation and management services became their solution to the problem. Key to their success was the ability of the contract operator to achieve savings by sharing key management and technical resources among a number of nearby communities while improving facilities and services for all.

Direct vs. Shared Resources: A Comparison
The resources involved in providing quality contract operation, maintenance, and management services to public water and wastewater systems fall into one of two categories. The first is direct resources, which are the most obvious and visible. They consist of personnel and related benefits costs, chemicals, repairs, maintenance supplies, and other such costs. These costs are trackable on-site every day.

The second category is the shared resources that are not always as visible, but are just as important. These include a broad range of services from accounts payable and accounts receivable to human resources and corporate management. They also include specialized utility functions such as regulation compliance, safety, division management, engineering, computer billing support, and utility financial reporting.

This second category of resources is vital to the success of systems operations and must be provided by an experienced professional staff with expertise that is specific to utility systems. The good news is that by sharing these resources with other systems, a utility can benefit every day from access to expertise that no individual system could afford on its own, and do so at a fraction of the cost.

Let\'s take a closer look at some of these shared resources.

Administrative Services
Administrative services are those that are necessary to operate and manage a contract service company. They include clerical services, payroll processing, personnel record keeping, personnel management, drug testing, legal, and corporate management.

Customer Support
Customer support services are those that are required for the successful operation of a utility but can be provided at a lower cost as shared services. These services are typically needed on an ongoing basis and include safety programs, direct supervision of the on-site system manager, regulatory compliance monitoring, paying bills, processing and tracking purchase orders, insurance, property records maintenance, loss prevention, and general computer services. Depending on the type of client and the services provided, this category may also include client utility bookkeeping, complete financial statements, utility billing programming, hardware network setup, and Internet support.

Shared Special Resources
Shared specialized resources are those that are key to successful long term utility operation but that are not needed on an every day basis by the client. These services can be shared on an as-needed basis at a substantially reduced cost. Alliance\'s management staff approaches an average 20 years experience in the water and wastewater utility field and includes a number of engineers with degrees in sanitary/civil engineering. While detailed design work is left to traditional consulting engineers, our in-house expertise saves our clients money and is already incorporated into their service agreements. Services often include utility representation with government agencies and others; financial planning, including budgeting and capital improvements; planning, engineering, and coordination with technical consultants; and training.

SUMMARY
At Alliance, we feel that our employees are our greatest resource and we have carefully created a highly positive atmosphere in which to work.

• Alliance is a recent winner of the Human Resources Management Association\'s prestigious Paragon Award, which honors Missouri firms who “have advanced the practice of human resources and made their companies models for others to emulate.”
• With more than 200 employees company-wide, Alliance offers a range of entry, mid-level, and senior-level positions with plenty of opportunity for career advancement.
• Alliance provides a variety of job opportunities: customer service representatives, meter readers, clerical workers, plant operators, maintenance workers, sanitary and environmental engineers, laboratory technicians, local and district managers, and more.
• On-going training and continuing education opportunities with bonuses for each level of certification obtained.
• Flexible work schedules, competitive pay, and numerous work locations.
• An award winning safety program.

The challenges to successful operation and management of a water or wastewater utility are growing every day. A contract operation and management service option makes it possible for utilities to share key management resources with other communities and cut costs. Individuals with extensive and specific expertise in utility systems provide expertise that few individual systems can afford to keep on staff—and at only a fraction of the total cost.

This concept is fully demonstrated in the success of the Bowling Green utilities, truly an example of a win-win partnership. The table below lays out the elements of resource sharing that makes this kind of win-win partnership equation work.