How it all started

Situation

KVID is an improvement district that is totally dependent upon service revenues for operational and capital expense. KVID does not draw upon general fund support from the county and does not receive any tax dollars.

In 2005, the KVID management team undertook an operational and financial review of the utilities operations. Nine years had elapsed since the last rate increase and the utility had burned through almost all of a one million dollar fund balance. Most of the fund balance was consumed by capital improvement projects and the remainder was consumed by operating expenses. It was projected that by early 2007 the fund balance would decrease to zero and continue into negative territory. In other words the utility’s revenue was less than it’s operating and capital costs and financially the utility was in big trouble.


Many of the past capital projects undertaken were for good reasons and resulted in service improvements and reliability. However, there existed no strategic or long range plan by which to justify these undertakings or to guide future decisions. The major criteria for project selection was to ease the immediate pain (the events) felt by the utility which impacted service to the community. The utility was focusing on the immediate events rather than on the patterns of behavior or systemic problems within the enterprise and community it served.

Problem

The problem with such an approach is that past, and future actions (projects, policies, and procedures), were not coordinated and a comprehensive process was not in place to guide the utility. Without a comprehensive strategic plan the optimum use of existing funds and the greatest return on money and expended effort could not be identified nor ensured. The utility was flying blind and in the clouds.

In addition, little growth was available to the community due to subdivisions to the north and east along with Forest Service lands to the south and west. There was little hope for capital infusion resulting from new growth.

As will become evident at the end of this paper everything done over the past five years and into the future is part of a “systems” approach. The mission, vision, goals and objectives for the utility were identified and the means of achieving those goals and objectives established. The key to creating an effective continuous improvement learning organization was the development of the people and processes and the establishment of trust between the employees and management and between the residents and the utility. In addition it was, and is, critical to optimize the system and not just the components.

There was much work undertaken and accomplished to develop and integrate the components of the team and the utility and to ensuring smooth and interdependent operation while maximizing the value of the system, not just the value of the components.

Implication

Without a well oiled operation and a long range and strategic plan the integration and optimization of these systems would not be possible. Projects undertaken would not be synergistic and less than optimal results would be achieved.

Need Payoff

Several factors contribute to the continued success of the utility. These include:

• Development and maintenance of long range and strategic plans,
• Development of a “systems” approach and development of a “Learning Organization”,
• Implementation of the Deming Management Method,
• Support of the Board of Directors (the County Board of Supervisors) and Public Works,
• Close integration of quality project management methods and strategic planning.

This paper does not focus on the above items but rather on some of the important undertakings and accomplishments of the utility over the past five years. For a deeper understanding of the methods and techniques mentioned above please visit www.skilledsolvers.com.