When Should a Municipality Consider Outsourcing Water and Wastewater Operations?
Municipal water and wastewater systems are essential public services.
That makes changing how they are operated a significant decision.
A city council, utility board, city administrator or public works director should not outsource water or wastewater operations simply because another municipality has done it. The decision should be based on the condition of the local utility, available personnel, operational requirements, financial considerations and the community’s long-term needs.
For some municipalities, maintaining an internally staffed utility continues to make sense.
For others, contract operations can provide access to certified operators, broader technical expertise, preventive maintenance resources and organizational depth that may be difficult to maintain internally.
The challenge is knowing when to begin evaluating the option.
Alliance Water Resources works with municipalities to evaluate water and wastewater operational needs and develop partnerships based on the requirements of individual communities.
The conversation does not need to begin after a crisis.
In many cases, the best time to consider contract operations is before one occurs.
What Does Outsourcing Municipal Water and Wastewater Operations Mean?
Outsourcing does not necessarily mean a municipality sells its water or wastewater system.
Contract operations generally involve a municipality hiring a professional operations provider to perform defined responsibilities under an operating agreement.
The municipality continues to own its infrastructure unless a completely separate transaction says otherwise.
The operating agreement establishes responsibilities.
Depending on the community, those responsibilities may include:
- Water treatment operations
- Wastewater treatment operations
- Water distribution
- Wastewater collection
- Preventive maintenance
- Sewer cleaning and jetting
- Camera inspections
- Manhole maintenance
- Meter reading
- Monitoring and reporting
- Chemical management
- Equipment maintenance
- GIS and system documentation
- Other operational responsibilities
The scope should be built around the municipality.
Outsourcing therefore does not have to be an all-or-nothing decision.
Sign #1: Your Certified Operator Is Preparing to Retire
One of the best times to evaluate contract operations is before a longtime operator retires.
Experienced municipal operators frequently carry decades of institutional knowledge.
They understand treatment processes, know the equipment, remember previous failures, and know where infrastructure is located.
They understand recurring problems and know which maintenance tasks deserve additional attention.
If that operator leaves before the municipality has a transition plan, the community may lose both a certified employee and an enormous amount of system knowledge at the same time.
Municipal leaders should begin succession planning as soon as retirement becomes foreseeable.
Contract operations can then be evaluated alongside other options such as developing an internal successor or recruiting externally.
The earlier that evaluation begins, the more choices the municipality has.
Sign #2: You Cannot Recruit Qualified Operators
Posting the same position repeatedly without attracting qualified applicants is more than an HR inconvenience.
It may indicate that the existing staffing model is becoming difficult to sustain.
Smaller municipalities can face particular recruiting challenges.
They may compete against larger utilities, industrial facilities and other employers for the same certified professionals.
Geography can further reduce the available applicant pool.
If recruiting remains unsuccessful, municipal leaders should ask whether continuing the same process is likely to produce a different result.
Contract operations offer an alternative.
Instead of depending entirely on finding one qualified person, the municipality can evaluate access to an established professional operations organization.
Sign #3: Your Utility Depends Too Heavily on One Person
Some municipal utilities operate extremely well because they have an exceptional operator.
However, that can also create risk.
Ask a simple question: What happens if that person is unavailable tomorrow?
Who understands the treatment process, has the required certification, and knows the reporting schedule?
Who responds to an equipment failure, knows where important infrastructure is located, and understands recurring system problems?
If the answer to most of those questions is the same employee, the municipality has a continuity problem even if the utility is currently performing well.
Contract operations can provide organizational depth and backup resources that reduce dependence on one individual.
Sign #4: Preventive Maintenance Is Continually Being Postponed
Municipal utility employees deal with competing priorities.
A planned maintenance task can quickly be displaced by a water leak, sewer backup, equipment failure or another urgent responsibility.
Occasional schedule changes are normal.
Consistent deferred maintenance is different.
When preventive work repeatedly moves to the bottom of the list, the utility can enter a reactive cycle.
Maintenance is delayed because employees are responding to emergencies.
Deferred maintenance contributes to additional failures.
Those failures create more emergencies.
Employees then have even less time for preventive work.
A municipality experiencing this pattern should evaluate whether the utility has enough operational capacity.
Contract operations can help establish structured preventive maintenance programs and improve documentation of equipment history.
Sign #5: Compliance Responsibilities Are Becoming Difficult to Manage
Water and wastewater systems operate within federal and state regulatory frameworks.
Certified staffing, monitoring, sampling, reporting, maintenance and recordkeeping may all affect regulatory readiness.
Compliance should be part of everyday operations.
If employees are struggling to keep up with required activities, municipal leaders should investigate why.
The problem may be staffing, inadequate processes, poor documentation, a lack of technical expertise, or several of those problems may be occurring simultaneously.
Professional operations can provide additional structure, qualified personnel and experience to support consistent utility management.
Sign #6: The Same Water or Sewer Problems Keep Returning
A recurring problem deserves more than a recurring repair.
If the same water main repeatedly breaks, the municipality should understand why.
And if the same sewer line repeatedly blocks, operators should investigate the underlying condition.
If a pump frequently fails, its maintenance history and operating conditions deserve review.
Additionally if boil advisories repeatedly follow infrastructure problems, broader system conditions may need evaluation.
Emergency response is necessary when failures occur.
Good utility management also asks what can be learned from them.
Contract operations can provide additional resources for preventive maintenance, sewer camera inspections, jetting, leak detection, GIS documentation and other system evaluation activities.
Sign #7: Your Infrastructure Knowledge Is Mostly in Employees’ Heads
Ask municipal leadership to locate every major valve, sewer main, manhole, lift station and other critical utility asset.
Could someone do it without calling the longest-serving employee?
If not, the municipality may have an information problem.
Institutional knowledge is valuable, but it should eventually become organizational knowledge.
GIS, asset records, maintenance histories and documented procedures can preserve information as employees change.
This becomes particularly important during retirements.
A municipality should not have to rediscover its own infrastructure every time an experienced employee leaves.
Sign #8: Operating Costs Are Increasing Without a Clear Explanation
Municipal utility costs naturally change over time.
Chemicals become more expensive.
Energy rates change.
Equipment ages.
Repairs become necessary.
But when operating expenses increase, municipal leaders should understand why.
Are chemical dosages optimized appropriately?
Has energy consumption increased?
Is aging equipment becoming inefficient?
Are emergency purchases occurring because inventory is poorly managed?
Are repeated repairs being made to equipment that should be replaced?
Could broader purchasing relationships reduce certain material costs?
Contract operations can provide an opportunity to review these questions.
Cost reduction should never come at the expense of treatment performance, reliability or regulatory requirements.
The goal is to identify avoidable waste while operating the system properly.
Sign #9: The Municipality Is Preparing for Growth or Major Improvements
Operational reviews are not only for struggling utilities.
Growth can create its own challenges.
A community planning treatment facility improvements, infrastructure expansion or significant development should consider whether its current operating structure will remain appropriate.
More infrastructure can mean additional maintenance.
Larger facilities may require additional expertise.
New equipment may require different operating knowledge.
Additional customers increase expectations for reliability.
Contract operations can be evaluated as part of long-term planning rather than waiting until expansion is complete.
Sign #10: Municipal Leadership Does Not Have a Clear Picture of Utility Performance
City councils and boards do not need to operate treatment equipment.
They do need enough information to govern effectively.
Municipal leaders should understand:
- Is the system meeting operational expectations?
- Is preventive maintenance being completed?
- What equipment is causing recurring problems?
- What significant infrastructure issues exist?
- Are there capital needs emerging?
- How is staffing affecting operations?
- Are there unresolved compliance concerns?
- Where are operating costs changing?
- What risks deserve attention?
If leadership only receives information after something goes wrong, the municipality may need better operational reporting and management processes.
Professional operations should improve visibility, not reduce it.
When Contract Operations May Not Be Necessary
Contract operations are not automatically the best choice for every community.
A municipality may already have:
- Adequate certified staffing
- Strong succession planning
- Reliable backup coverage
- Effective preventive maintenance
- Good infrastructure documentation
- Appropriate technical expertise
- Stable operational performance
- Strong internal management
In that situation, maintaining internal operations may continue to make sense.
Municipal leaders can still benchmark performance and periodically evaluate alternatives without changing the operating structure.
The objective is not outsourcing for its own sake.
The objective is reliable, sustainable utility operations.
What Should Municipalities Compare?
When evaluating internal operations against contract operations, compare complete operating models rather than simply comparing payroll with a contract price.
You should consider:
Staffing
- How many employees are required?
- What certifications are needed?
- What does recruiting cost?
- How difficult is retention?
- What happens during vacations, illness or vacancies?
Training and Certification
- Who manages continuing education?
- Who develops future operators?
- What happens when certification requirements change?
Maintenance
- Is preventive maintenance consistently completed?
- What resources are available for specialized maintenance?
Expertise
- Who helps when an unusual treatment or infrastructure problem occurs?
Emergency Response
- Who responds after hours?
- What backup resources are available?
Administration
- Who handles operational documentation, monitoring and reporting responsibilities?
Equipment and Infrastructure Knowledge
- How is institutional knowledge preserved?
Purchasing
- How are chemicals and operating supplies purchased and managed?
Management
- How does municipal leadership receive information about utility performance?
This creates a much more meaningful comparison than looking at a single budget line.
Questions to Ask a Contract Operations Provider
Before entering an agreement, municipal leaders should ask detailed questions.
- What systems does the provider currently operate?
- What certifications do its operators hold?
- Who will be responsible for our facilities?
- What happens when that person is unavailable?
- What services are included and what services cost extra?
- How are emergencies handled?
- How will existing municipal employees be treated?
- What is the preventive maintenance process?
- How will municipal leadership receive reports?
- How are compliance responsibilities assigned?
- Can the provider support distribution and collection systems?
- What technical expertise is available beyond the assigned operator?
- How are chemical and material purchases handled?
- What is the transition process?
- How will system knowledge be documented?
A good provider should be willing to explain the operating model clearly.
What Should a Transition Look Like?
Changing operational structures should be deliberate.
The transition should begin with information.
Existing staff should help document treatment processes, maintenance schedules, infrastructure, equipment history, recurring problems, regulatory responsibilities and ongoing projects.
Roles should be clearly defined.
Municipal employees should understand how they fit into the new structure.
Emergency responsibilities should be established.
Important contacts should be documented.
Reporting expectations should be agreed upon.
Whenever possible, knowledge transfer should occur while experienced municipal employees are still available.
The goal is continuity.
Residents should continue receiving reliable service while the operating structure changes behind the scenes.
Alliance Water Resources’ Four C’s
Municipal leaders do not need to decide to outsource before talking with Alliance Water Resources.
The purpose of the first conversation is to understand the situation.
Contact Alliance
Tell us what is happening.
An operator may be retiring.
Recruiting may not be working.
Maintenance may be falling behind.
Costs may be increasing.
Or leadership may simply want to understand what alternatives exist.
Collect Information
Alliance reviews the facilities, infrastructure, staffing, certification requirements, maintenance responsibilities and operational challenges.
Consider Your Options
Municipal leaders can evaluate the available approaches.
That may mean maintaining internal operations.
It may involve targeted assistance.
Or it may lead to a broader contract operations partnership.
Contract: Partner
If professional contract operations provide the right solution, Alliance and the municipality establish responsibilities and begin the partnership.
The decision comes after understanding the options.
Do Not Wait Until the Municipality Has No Options
A staffing emergency is one of the worst times to make a major operational decision.
When the only certified operator has already left, municipal leaders have fewer choices and less time.
When equipment has already failed, and preventive maintenance cannot prevent that failure.
If institutional knowledge has already walked out the door, documenting it becomes much harder.
The better approach is to evaluate the utility while there is still time to plan.
For instance, if an operator expects to retire in two years, you should begin now.
If recruiting has become increasingly difficult, investigate alternatives.
When preventive maintenance is falling behind, determine why.
If municipal leadership lacks visibility into system performance, improve the reporting structure.
And if recurring problems continue, investigate the underlying causes.
Contract operations may or may not ultimately be the right answer.
But understanding the option before a crisis gives municipal leaders the ability to make a deliberate decision rather than an emergency one.
Alliance Water Resources works with municipalities throughout Missouri, Kansas, Iowa, Nebraska and other communities within its service area to provide professional water and wastewater operations.
If your municipality is asking whether its current operating structure will still work five or ten years from now, that is a good reason to start a conversation.
Collect the information.
Consider your options.
Then determine whether a contract partnership makes sense for your community.
Frequently Asked Questions
When should a municipality consider outsourcing water operations?
A municipality may want to evaluate contract operations when it faces operator retirement, difficulty recruiting certified personnel, inadequate backup coverage, deferred maintenance, recurring system problems, increasing operational complexity or concerns about the sustainability of its current staffing model.
Does outsourcing mean selling the municipal water system?
No. Contract operations generally involves hiring a professional provider to perform defined operational responsibilities while the municipality retains ownership of its infrastructure. The exact arrangement depends on the operating agreement.
Can a municipality outsource only part of its utility operations?
Potentially. Contract operations can be structured around defined responsibilities. Depending on the municipality and applicable requirements, a provider may operate specific facilities or support treatment, distribution, collection, maintenance or other functions.
Are contract operations only for small towns?
No. Municipalities of different sizes can evaluate contract operations. The reasons and scope may differ according to staffing, facilities, infrastructure, operational complexity and local objectives.
How should a municipality compare internal operations with contract operations?
Compare the complete operating models. Consider staffing, certification, training, backup coverage, maintenance, emergency response, technical expertise, documentation, purchasing, management and long-term continuity rather than comparing only payroll with the proposed contract price.
How far in advance should a municipality prepare for an operator retirement?
Planning should begin as early as practical. Starting well before retirement provides more time to document institutional knowledge, develop internal employees, recruit qualified candidates and evaluate contract operations without making a decision during an emergency.