Evan Kirk is a fellow in the 2018 Leaders in Environment and Finance (LEAF) program. As part of the LEAF Fellowship, Evan worked with Envirolink over the summer of 2018. Evan’s work with Envirolink relied on using information gathering and data communication to improve Envirolink’s managerial capacity survey. This survey assesses and scores a wide variety of utility managerial, financial, and policy performance metrics.
Capacity, as defined by the U.S. Environmental Protection Agency, includes technical, managerial, and financial capabilities, also known as TMF capacity. Systems with sufficient TMF capacity can safely and consistently provide drinking water and wastewater services to their customers and are far less likely to receive notices of violation (NOVs) for non-compliance than systems with insufficient capacity. Conversely, systems that are struggling to develop or maintain capacity may be at an increased risk for operational problems such as non-compliance violations. One option for these struggling systems is to contract with companies like Envirolink for excess technical, managerial, and financial capacity.
Envirolink is a full-service utility management company that specializes in providing water, wastewater, and public works services to both public and private clients across the Carolinas. One component of Envirolink’s business model is lending excess capacity to systems in two major ways: first, through the operation and maintenance of physical assets, and second, through the provision of managerial and financial consulting services.
How does a system know if their capacity is adequate?
Systems often have deficiencies in capacity that only become apparent when something goes wrong, making discovery of capacity issues difficult.
Once a problem develops as a result of insufficient TMF capacity, a solution may be costly and time-consuming, and the mistakes may be repeated if the lack of capacity that led to the problem is not addressed. Unfortunately, assessing total system capacity is difficult because of the range of quantitative and qualitative performance indicators that need to be assessed and the subjective nature of these indicators.
Nevertheless, the act of self-assessing capacity has tremendous value, because through this process systems may become aware of areas of insufficient capacity. Knowledge of capacity issues can allow these utilities to address trouble areas before issues develop by developing or contracting for additional capacity.
Self-Assessing Capacity
In order to assist systems in thoroughly self-assessing their TMF capacity, Envirolink developed a managerial capacity survey that assesses and scores a wide variety of utility managerial, financial, and policy performance metrics. This interactive, Excel-based survey includes term definitions, helpful links, and automated indicator scoring.
This survey allows utilities to self-assess capacity related to performance categories as recommended by EPA in Assessing Water System Managerial Capacity, including:
- Governing Body Oversight
- Governing Body Training
- Staff Training
- Planning
- Asset Management
- Budgeting
- Finances
- General Policies
- Compliance
- Non-revenue Water
- Customer Support and Education
To make the survey even more user-friendly, a form within the finances section automatically calculates various financial performance indicators including operating ratio, days cash on hand, debt service coverage ratio, and debt-to-equity ratio when utility representatives enter their most recent audited financial report information. However, for many utilities in North Carolina, these performance indicators can be found on the financial benchmarks tab of the North Carolina Water and Wastewater Rates Dashboard. If this was the case, utilities could manually enter these indicators instead of using the finances form.
The end result of the survey is a “utility relative score” which serves as a performance metric of TMF capacity. This performance metric is called a “utility relative score” because the utility’s performance is scored as a percentage relative to a perfect utility performance score of 100 percent. By completing this survey, utility representatives can identify specific areas of capacity deficiency, the best way to address these deficiencies, and can estimate the overall TMF capacity of the utility. Moreover, Envirolink can also diagnose areas in which the utility may lack capacity and might benefit, should the utility choose, from contracting for operational, maintenance, managerial, or financial consulting services to address these deficiencies.
This survey is an example of how useful, understandable information gathering and data communication can be harnessed to improve drinking water and wastewater system performance. Ultimately, the more information available to a utility, the better the utility can recognize strengths, address weaknesses in technical, managerial, and financial operations, and provide safe and reliable drinking water and wastewater services to its customers.
Evan has been with the EFC since 2016, when he graduated from UNC Chapel Hill in 2016 with a degree Environmental Science. He is currently a master’s candidate in City and Regional Planning at UNC with a concentration in land use and environmental planning.