Publication: The Use of Performance-Based Contracts for Nonrevenue Water Reduction: Output of the Global Program on Developing Good PBC Practices for Managing NRW
Loading...
Date
2018-09
ISSN
Published
2018-09
Author(s)
Editor(s)
Abstract
This operational manual describes the process for planning and implementing performance-based contracts (PBCs) for nonrevenue water (NRW) reduction. An NRW-PBC is a contract for outsourcing technical, commercial, and construction activities related to NRW reduction, while providing the contractor with incentives to achieve the desired results. Unlike conventional NRW reduction contracts in which contractors are paid based on inputs (for example, number of connections replaced), NRW-PBCs pay the contractor for outputs, such as amount of water saved, number of illegal connections detected, or number of customers receiving 24/7 service. NRW-PBCs differ from management contracts, concessions, leases, or other forms of private sector participation, in that the utility retains control of utility operations and assets. The PBC allows the utility to take advantage of the expertise and incentivized performance of specialized private sector firms to reduce NRW. NRW-PBCs do not entail privatization of management, operations, or assets. This manual can be read in its entirety for general knowledge of NRW-PBCs and the NRW-PBC preparation process. Practitioners can also reference individual sections of the guide during the NRW-PBC preparation process. The primary users of this manual are those involved in assessing, preparing, and implementing NRW-PBCs. This includes governments, water utilities, regulators, consultants, contractors, and international finance institutions.
Link to Data Set
Citation
“Kingdom, Bill; Sy, Jemima; Soppe, Gerhardus. 2018. The Use of Performance-Based Contracts for Nonrevenue Water Reduction: Output of the Global Program on Developing Good PBC Practices for Managing NRW. © World Bank. http://hdl.handle.net/10986/30433 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication The Challenge of Reducing Non-Revenue Water in Developing Countries--How the Private Sector Can Help : A Look at Performance-Based Service Contracting(World Bank, Washington, DC, 2006-12)This study explains that one of the major issues affecting water utilities in the developing world is the considerable difference between the amount of water put into the distribution system and the amount of water billed to consumers (also called "non-revenue water" [NRW]). High levels of NRW reflect huge volumes of water being lost through leaks, not being invoiced to customers, or both. It seriously affects the financial viability of water utilities through lost revenues and increased operational costs. In this report, a number of case studies, taken from some of the largest and most recent performance-based NRW contracts, are studied and discussed in terms of their technical and financial performance. Lessons learned from the case studies are analyzed, showing the potential benefits of NRW performance-based service contracting with the private sector. This paper was prepared as part of a Public-Private Infrastructure Advisory Facility (PPIAF)-financed study to investigate opportunities for the use of the private sector to assist water utilities in developing countries in reducing non-revenue water. This study indicates that the private sector help ailing public sector utilities in developing countries reduce NRW even though the performance- based service contracting approach described should not be seen as a substitute for overall sector reform. The case studies, while limited in number, provide examples of both good ideas and those to be avoided-but hopefully enough to help a utility and its consultants devise better cost-effective contractual arrangements suited to their conditions.Publication Corporatizing a Water Utility : A Successful Case Using a Performance-Based Service Contract for ONEA in Burkina Faso(World Bank, Washington, DC, 2010-03)Thanks to a corporatization process spanning two decades, Burkina Faso's national water and sanitation utility ranks among the few well-managed public water utilities in Sub-Saharan Africa. Key to its success has been the government's unceasing commitment to reform, which included the successful implementation of an innovative performance-based service contract with an international operator from 2001 to 2006. The experience shows that it is possible to establish a well-performing public water utility in a poor developing country- as long as the governance framework ensures the autonomy and accountability of the service provider and the government supports the sector's long-term financial viability through an appropriate tariff and investment policy.Publication Reducing Water Loss in Developing Countries Using Performance-Based Service Contracting(World Bank, Washington, DC, 2008-06)A major challenge facing water utilities in the developing world is reducing water loss caused by leakage, theft, and improper billing. The difference between the amount of water put into the distribution system and that billed to consumers is known as Non-Revenue Water (NRW). The worldwide cost of NRW is conservatively estimated at $15 billion/year. More than a third of losses occur in the developing world, where some 45 millionPublication Running Water in India's Cities : A Review of Five Recent Public Private Partnership Initiatives(Washington, DC, 2014-01)India is home to more than 370 million people in urban areas. No city in the country meets the government's targets for continuous pressurized safe water with full coverage and full cost recovery. Groundwater sources are also being depleted putting severe constraints on economic development. To make up for unreliable services, households have invested significantly in alternate arrangements over the past three decades. Reliable estimates of asset condition and performance in Indian cities are difficult to establish, given the poor culture of documentation, data collection, and reporting. Data drawn from several benchmarking initiatives indicate the following: service delivery parameters are well below established norms, with coverage through piped water supply ranging between 55 percent and 89 percent, and while per capita availability is fairly high, at 90-120 liters per day, no city offers continuous water supply. Daily supply averages four hours, with many cities alternating supply every other day. These challenges occur in a context of limited data or data management capability and largely unknown conditions of existing assets, which present difficulties in assessing the costs and timelines involved in improving service levels and operational efficiencies. Moreover, the investments required are likely to be significant, particularly since most cities have seen little systematic investment in asset management and expansion over the years. Simultaneously, it is recognized that investments alone will not be effective in the context of complex and fragmented institutions with little accountability; lack of capacity to run utilities efficiently and meet performance standards; weak commercial orientation; interference in utility operations by external entities; and the absence of a regulatory framework focused on customer service and financial sustainabilityPublication Running Water in India's Cities : A Review of Five Recent Public-Private Partnership Initiatives(Washington, DC, 2014)India is home to more than 370 million people in urban areas. Historically, almost all water supply provision has been managed by the public sector through municipal or state-level departments or parastatals. Benchmarking initiatives show that coverage through piped water supply ranges between 55 percent and 89 percent in urban areas. Per capita availability is fairly high, at 90 to 120 liters per day, but no city yet offers continuous water supply. Daily supply averages four hours, with many cities alternating supply every other day. These challenges occur in a context of weak management systems and little data on existing assets, which makes it difficult to assess investment needs and time lines to improve service levels and operational efficiencies. While investment requirements are likely to be significant, it is recognized that investments alone will not be effective unless the country simultaneously addresses related issues such as complex and fragmented institutions with little accountability; lack of capacity to run utilities efficiently and meet performance standards; weak commercial orientation; interference in utility operations by external entities; and the absence of a regulatory framework focused on customer service and financial sustainability. In response to social issues, all contracts have proactively provided for service delivery options to consumers as well as tariff concessions (bulk supply to poor neighborhoods, fortnightly payment options, special tariff for group connections, and so forth). It will also be useful to explicitly state the subsidy that the city will bear for connecting poor consumers to the network. Explicit arrangements in the contract will allay apprehensions of urban poor as well as encourage the operator to connect the poor.
Users also downloaded
Showing related downloaded files
Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication Tanzania Country Climate and Development Report(Washington, DC: World Bank Group, 2024-12-12)The Country Climate and Development Report (CCDR) for Tanzania identifies the impact of climate change on the country’s economy. The CCDR uses macroeconomic, climate, sectoral, institutional, and financial models to identify the economy’s exposure to climate risks and the opportunities to integrate climate action and development. High poverty levels and dependence on rainfed, low-productivity agriculture leaves Tanzania’s economy vulnerable to climate risks. By 2050, climate change could push an additional 2.6 million people in poverty and force up to 13 million Tanzanians to migrate internally. The CCDR presents how implementation of three multisectoral intervention areas could generate climate-positive, resilient, and inclusive growth in Tanzania by 2050. These are: integrating climate considerations when strengthening human capital and social protection; optimizing land and water use and management to boost agriculture and rural productivity, augment climate resilience, and lower greenhouses gas emissions; and prioritizing resilient and low-carbon transport, energy and digital infrastructure systems in urban areas and different sectors. The CCDR details governance arrangements for effective climate change action, presents investment needs, and describes options for mobilizing financing. Action is needed both to reduce vulnerabilities of Tanzania’s current economy and realize the country’s Vision 2050 goal of a more inclusive and sustainable growth trajectory. Targeted climate action could boost private investment and job creation, enabling Tanzania to meet its development objectives in the face of global risks. Technical background reports prepared for the CCDR are available upon request.Publication Kenya Country Climate and Development Report(Washington, DC: World Bank, 2023-11-16)The Kenya Country Climate and Development Report (CCDR) aims to identify the impact of climate change on Kenya’s economy. Through robust and rigorous analyses that cover climate impact modeling across multiple scenarios and the overall economy, sectoral issues, investment needs and potential sources of financing, the CCDR aims to identify high impact intervention areas that would support climate positive development. Action against climate change is imperative to avoid setting back Kenya’s aspiration of being an upper-middle-income country and reducing poverty in the next decade. In a business-as-usual scenario, inaction under different climate futures could dampen real GDP by 1.25 to 2.4 percent by 2030 and 3.61 to 7.25 percent by 2050 compared to the baseline. Climate impacts Kenya’s human, natural and physical capital and the impacts vary by region. By 2050, no climate action could also result in 1.1 million additional poor compared to the baseline under the pessimistic climate scenario, with communities in the arid and semi-arid areas being most hard-hit. Kenya can also be a key player in the global climate solutions arena if it maintains a low-carbon growth path. Kenya stands out among African and lower-middle-income countries due to its well-diversified and primarily low-carbon energy mix, with about 90 percent of electricity generation coming from renewable resources. Kenya could also generate carbon offsets through large-scale landscape restoration. The CCDR identifies five key action areas that could enable Kenya to meet its growth aspirations in an inclusive and climate-resilient manner. The three multisectoral action areas are: managing water, land, and forest for climate-resilient agriculture and rural economies; delivering people-centered resilience with climate-informed basic services and urbanization; and strengthening Kenya’s competitiveness in international markets through shifts in energy, transport, and digital systems. It is necessary to complement these the three action areas with two crosscutting actions areas - improving integration and coordination of climate action in policy, planning, and investment decision-making across the economy, and developing and operationalizing policy measures for mobilizing climate finance from private and public sector. Implementing these action areas should account for regional differences to climate risk exposure.Publication Women, Business and the Law 2024(Washington, DC: World Bank, 2024-03-04)Women, Business and the Law 2024 is the 10th in a series of annual studies measuring the enabling conditions that affect women’s economic opportunity in 190 economies. To present a more complete picture of the global environment that enables women’s socioeconomic participation, this year Women, Business and the Law introduces two new indicators—Safety and Childcare—and presents findings on the implementation gap between laws (de jure) and how they function in practice (de facto). This study presents three indexes: (1) legal frameworks, (2) supportive frameworks (policies, institutions, services, data, budget, and access to justice), and (3) expert opinions on women’s rights in practice in the areas measured. The study’s 10 indicators—Safety, Mobility, Workplace, Pay, Marriage, Parenthood, Childcare, Entrepreneurship, Assets, and Pension—are structured around the different stages of a woman’s working life. Findings from this new research can inform policy discussions to ensure women’s full and equal participation in the economy. The indicators build evidence of the critical relationship between legal gender equality and women’s employment and entrepreneurship. Data in Women, Business and the Law 2024 are current as of October 1, 2023.