ASSIGNMENT REPORT

Iligan City, Philippines 4 August 08 16 August 08

Summary and Recommendations

Progress during the fourth Iligan on-site program of 2008 was mixed. Key participants were consistently involved but a major outside action resulted in significant distraction from full participation. My suggestions for Iligan are: 1. Develop a strong set of examples of where/how TOC concepts have been used in determining or setting priorities in Iligan operations. Yellow highlighted sections in this report describe where TOC concepts have been used on City projects with positive financial impacts. Italicized sentences indicate other possible areas of effective TOC application. 2. Resolve the incongruous pressure and valve situation at the crossover connection near Camague. Simple excavation and valve opening might double the flow of water to the City. CAUTION: while doing this is ideal, it may result in some pressure increases above the capacity of local lines. 3. Use the receipt of bids higher than acceptable for the Water Supply Development Project as an opportunity to modify some project details and to structure the project so significant improvement can be achieved in water supply by the mid-point of 2009. The specific recommendations that will achieve this are listed near the end of this report. 4. Arrange to house the PIU and Repair Task Force at the ICWS location. Much more suitable space is available and the co-location might serve to foster better communication among the three functions. 5. The GTLMH needs to complete pressure and volume measurements to determine if the entire hospital can be provided adequate water without using the ground storage tank and re-pumping. This has the potential to improve service while reducing electrical expense. It also need to take some actions to reduce unsanitary conditions in its operations. 6. Reduce the storage and application of gaseous chlorine at Ditucalan to the small amount needed in only the 16 line to provide a residual at Buruun. Relocate the main chlorination station to the water filling station immediately north of Global Steel using solution feed with the repaired pump from Hinaplanon station.

Glossary The following list provides a definition of acronyms for terms and individual names used frequently throughout this report. Acronyms CCPM Critical Chain Project Management CRT Current Reality Tree FRT Future Reality Tree TOC Theory of Constraints PRT Prerequisite Tree CEO City Engineer Office GTLMH Gregorio T. Lluch Memorial Hospital ICWS Iligan City Waterworks System PIU Project Implementation Unit (for assuring implementation of the WSDP) RTF Repair Task Force: focused on fixing numerous water piping leaks both public and private WSDP P 495 Million Water Supply Development Project Individuals CMO ICWS Manager Engr. Christine Orbe RCN InWEnt coordinator Revilla Noel

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Day-by-Day Synopsis
Friday 1AUG Departed Albuquerque, NM, US. Transferred flights at LAX and departed for RP. Saturday 2 AUG Day lost in crossing the International Dateline. Sunday 03 AUG Arrived Manila 5:00. Arrived Cagayan de Oro 11:30. Waited at airport until 17:00 for TAG3 consultant Mr. Gargantes. Arrived in Iligan at 19:00. Met with RCN and others to review events since previous mission. Monday 04 AUG Spent the day at ICWS reviewing previous assignments and current status. Initially met with CMO and Mr. Dargantes to hear TAG3 plans for a water tariff study. They noted that businesses expressed concern that the WSDP is too expensive in stakeholder meetings on the tariff Businesses want improved water delivery and high water quality - especially bacteriological Limited staff was available because the Mayor called on city employees and other community sectors to rally in opposition to a plan for nationalization of eight barangays. The nationalization plan would have reduced Iligan area by over 80%. City revenues would be substantially decreased since revenue distribution is based on a formula that factors in population and land area. The plan proposal led to major civil unrest as described later. As group we reviewed criteria and the InWEnt program focus on developing guidelines and procedures for prioritization of projects. We then set a schedule to meet with small functional area groups for a few hours each day to focus on specific issues with a meeting of all ICWS division chiefs to follow. CMO described how ICWS used TOC methods to solve the Luinab reservoir washout situation. This was third time the tank hillside has washed out. Instead of just rushing in to replace the washed out section, they looked for the root cause of the washout. In quite classic TOC fashion, they found that the drainage channel had inadequate capacity. (It was literally a bottleneck). They fixed that by installing a secondary channel section and were able to sustain a subsequent heavy rain without endangering the reservoir even before the hillside was re-riprapped. (pics 100_2067, 100_2107, & 100_2111) CMO described a success with the revised operating schedule of the Hinaplanon pumping station. In spite of technical problems that were encountered, they-switched to a 24 hour continuous operation run schedule and now some areas that just a month ago had only intermittent water have water every day. Several actions have been taken on the WSDP to deal with bids higher than available funding. First, the new reservoir near Camague has been eliminated. (It turns out that the need for this tank had been questioned by the project loaning bank. Recall I advised that the tank was not only unnecessary but a detriment to the project.) Second, chlorination equipment has been cut. While this might seem bad at first glance it may be a positive development considering safety issues surrounding use of gaseous chlorine as long as chlorination facilities are added at the appropriate locations. There was some concern that the PIU has added requirements for pipe that incited vendor protest and may lead to higher prices. I met with the metering & billing chiefs. They are still not able to get all meters read each month. The most recent cause was loss of a meter reader who was hit by a car. However, there are Assignment Report Iligan August 08 3

multiple areas of success. In spite of the traditional mid-year cutback for budget balancing, ICWS was approved to hire 19 workers to perform shut offs for non-payment. (Remember this approach of shutting off the accounts with the largest amount due was established in previous sessions. ) Although the additional workers cost P125,000 per month, this effort must be considered a major success because the city collected P8 million above their usual amount. This is truly an example of the successful application of the TOC concept of focusing on increasing throughput. This effort should continue and should continue to add substantially to water revenues for the remainder of the year giving time to resolve the 50% non-payment dilemma. Another TOC implementation success relative to revenue generation is the introduction of a resolution adopting An ordinance requiring the installation of water meters, billing to, and collecting from all government buildings/structures/facilities/offices, both local and national, which are consuming water supplied by the ICWS. This was a recommendation from an analysis that showed a significant amount of revenue was not collected due to non-billing and/or non-payment by government entities including even the ICWS! If adopted and implemented this will not necessarily generate additional revenues since City department budgets will have to be increased to pay their water bills. However, it will set a tone that water service is not free and quantify the actual value of the revenue stream generated by the ICWS. Tuesday 05 AUG I spent the day with staff at ICWS. CMO mentioned that the TAG3 program received the Mayor's approval to study tariff requirements, ICWS management style (possible forms are government owned corporation, cooperative, City department), data management upgrade & training, and clustered meter effort. During a break we started preparing a diffuser for improving chlorine injection at the Ditucalan source. Division chiefs discussed the Hinaplanon distribution improvement effort. In addition to not all of the necessary data being available, it was learned that the distribution lines are clogged. We discussed a flushing program as the next step. The TOC relevance is that we need to get the existing lines operating at full capacity (a relatively inexpensive task that requires no capital) before spending money on increasing the line size. CMO mentioned that there is a well that was converted to supply the GTLMH that cost P1.3 million. It is not used continuously and may be able to be modified to serve the entire city hall complex in addition to the GTLMH. The water is potable but colored. Significantly, it is chlorinated. This might enable elimination of a presently operated booster station the operation of which reduces the system pressure in some downtown areas below acceptable. It might also allow deferral of a plan to build a new line to the city hall area. The existing line has been plagued with illegal connections and it is quite likely that a new line would suffer the same fate. This application of the TOC concept of maximizing the throughput of existing systems provides some indication that the theory is being put into practice. Wednesday 06 AUG We spent the day in working session with ICWS division chiefs evaluating & prioritizing solutions. Thursday 07 AUG All day was spent at ICWS completing review of progress and demonstrating some further understanding of the individual CRT/FRTs. We took the opportunity to present the availability of a complete utility management software package called CUPSS. This free program allows examination Assignment Report Iligan August 08 4

of all aspects of utility operation level of service, financial (rates & budget), asset management, and work order creation & tracking. If adopted, this would provide a sound basis for most of the day-to-day efforts as well as for annual budgeting and long-range planning like the WSDP. I also spent 5 hours in the evening reviewing the GTLMH CRT/FRT with the Administrative Officer in preparation for the meeting at GTLMH the next day. Friday 08 AUG The morning was spent at City Hall in anticipation of a meeting with Mayor Cruz. During that time we met with staff of the CEO, CPDO, and PIU to discuss applications of CCPM in their projects. The afternoon was spent primarily at GTLMH reviewing their progress on developing a CRT and FRT. Most of the session was spent beginning to deal with PRT issues. A part of the time at the GTLMH was spent reviewing their facilities. The hospital water supply is intermittent in spite of there being three different supply sources Ditucalan, Hinaplanon, and the well near City Hall. (pics 100_1936, 100_1938, 100_1940, & 100_1950) This has led to the use of a ground storage tank with repumping for hospital uses although there is a tank for providing gravity pressure to the first level. (pics 100_2019, 100_2021, & 100_2033) There is limited water pressure on the second floor which notably houses the intensive care unit. (It was reported that the intensive care unit is unusable because of lack of equipment.) There is a donated 1000 gallon tank available for use but funding and design delays have resulted in it not being installed. (pic 100_2038) I presented a simple approach for placing the tank in service by mounting it on top of the existing elevated tank. However, before doing even this, I recommended verifying that the existing tank by City Hall is not capable of providing all the needed volume at a sufficient pressure. This is to be confirmed by making some pressure/volume measurements. Some very unsanitary conditions at the hospital were also noted. First, the hospital liquid waste is simply discharged into an open drainage channel. This is not unusual since this is the norm for most liquid waste throughout the City. However, the hospital needs to apply some immediate disinfection considering that its waste is much more likely to be carrying disease causing organisms. This can be as simple as sprinkling powdered chlorine (like that used by the ICWS) or hydrated lime along the existing hospital discharge channel on a routine basis. This should have a positive result given that this waste flows through several adjacent residential areas. Second, the hospital laundry is washed by hand. Given the high probability of infectious material, a high temperature and disinfectant (chlorine) wash is needed. We discussed some potential for preparing a grant proposal to acquire such capability. Saturday 09 AUG In morning, worked with ICWS staff to install the chlorine solution mixing tank and injection pump at the Hinaplanon station. The installation has problems. Work is still needed to get disinfection of well water (under the influence of low quality river water) operating properly and consistently without the use of gas chlorine due to the adjacent dwellings. In addition to the injection pump and high safety hazard electrical wiring, the air release valve is not functioning. (pics 100_1955, 100_1961, & 100_1965) This requires ICWS to manually open a blowoff valve each time the wells are started. This not only incurs operator attention but water is wasted. In the afternoon, worked on possible arrangements for using existing on-site water tower to supplement supply to GTLMH. Sunday 10 AUG RCN took me around to see various aspects of the city. Most surprising was Buruun. This area that gets free water is not a small area with a few residents. It is a thriving sizable part of the City with Assignment Report Iligan August 08 5

major businesses. Efforts to measure water use and bill/collect from this area could generate notable revenue. Remainder of day spent preparing for coming week. Monday 11 AUG The day was spent at ICWS focused on the declogging effort of the lines between Agus River and City center. (pic 100_2192 Field operations included closing valves to verify flow patterns and flushing the 16 inch line. Ultimately, the process was ineffective because the wrong valve had been closed because the one employee who knows where the right valve is was home sick. This reinforces the finding of several CRTs that lack of good mapping is a root cause of many delays and operating problems. In later days, the correct valve was closed (verified by the pressure rise to near theoretical). This caused a major line burst. Efforts were delayed while that was repaired. The line had been reported as being in bad condition and needing repair but funding was not a priority. Finally, when the proper valves were closed a major anomaly was discovered. When the valve on the 16 inch line (at Camague) is closed, the pressure in the 18 inch line on the other side of the street drops to zero. This indicates that the entire City may be being fed through just the 16 inch line instead of both the 16 inch and 18 inch lines. Remedying this might double the delivery capability of the existing system with essentially no capital investment. Tuesday 12 AUG Most of the morning was spent in discussions with the PIU. They provided a superb presentation of the WSDP. It clearly showed the location and configuration of the project. The project is in a bit of a hiatus because the bids for the civil works (construction) and the materials (mostly pipe) have come in much higher than the available funding. The PIU has convinced the Mayor that the project now can not be completed by the once absolute deadline of September 2009. We discussed some potential modifications to improve the functioning of the final project and bring the cost within the available budget. I also presented a reprioritization approach that would deliver the majority of the desired results well before September 2009. Unfortunately, subsequent communications indicate that the PIU leadership has no intention of taking this opportunity to reprioritize the project structure but will proceed by simply cutting some elements of the project. Some of these appear to be detrimental to the overall purpose of the project to deliver water to more of the City population. My specific followup listing of these steps is included near the end of this report to avoid any question of the recommendations. The afternoon consisted of a seminar presentation of detailed PRT development methodology and a more detailed presentation of change management concepts requested at the session conducted last June. (pics PN121344 & PN121345) In the evening, we met for 3 hours with national Water Resources Board representatives. They were in the City to discuss approval of the requested water rights from the new Abaga Spring source. Wednesday 13 AUG The morning was spent at City Hall. Architect Balondo and I discussed the plan to have Iligan personnel present examples of successful use of TOC concepts in prioritization of projects at the Bangkok meeting. Along with his staff we discussed the use of CCPM concepts. In this discussion the story of the C-3 road was presented. (pic S6003722) This is a classic example of what results when TOC concepts are ignored. As planned by the national Department of Public Works and Highways, there would be 3 bridges to nowhere after spending P50 million. This situation has since been changed with some possibility that a usable section of roadway will be constructed that will integrate with the ultimate design when that is fully funded. This would be a prime example of application of the TOC throughput concept. Assignment Report Iligan August 08 6

The early afternoon was spent with the Economic Development Office. (pic S6003754) They have begun thinking of some TOC applications especially in the slaughterhouse operation. (This was one of the areas analyzed in the March 2008 workshop.) As identified in that and subsequent meetings, they needed to increase their customer satisfaction. They had meetings as advised and the results are notable. They doubled the number of animals being handled by there operation. (Although this might be influenced by some outside forces as well.) Then, when that resulted in a shortage of vehicles, they used TOC concepts and identified the ability to use existing vehicles since deliveries are in the 2 AM time period when those vehicles are not being used. In the late afternoon RCN and I met for a while with the Mayor. (At this time the gravity of the situation involving the MILF (Militant Islamic Liberation Front) became somewhat obvious as the Mayor was approving emergency arrangements for construction of security stations in various locations around the City.) In the evening the meeting with the Mayor continued. (pic S6003766) We provided a full program status review. The Mayor was exceptionally supportive and asked to receive our recommendations. RCN has delivered the detailed recommendations listed near the end of this report to the Mayor. (The nature of the unrest was highlighted when the Mayor indicated that his family was staying at an undisclosed location for safety reasons.) Thursday 14 AUG Most of the morning was spent in discussions with the RTF. This group is performing an exceptional activity. They are repairing numerous leaking pipes throughout the City. More importantly, they are measuring the amount of water flowing from each leak before it is repaired. They are hampered by 1) lack of knowledge of repair methodology, 2) adequate funding to make permanent repairs (many are made by wrapping gum rubber strips around the pipe), and 3) inadequate facilities. (They are housed in a 2 meter by 3 meter storage room with a roll up door in back of the bus terminal. pic 100_2194) There is an office at the ICWS that has the necessary space and it is in the same room with the ICWS line repair experts. These two groups could multiply their effectiveness if housed together. ICWS by learning the importance of documentation and RTF by having access to repair technique knowledge. The early afternoon was spent in field examination of areas considered for improvement. This involved visits to pressure improvement demonstration areas (pic 100_2201), the Hinaplanon pumping service area, the Luinab reservoir, and GTLMH. The last was to observe directly a piece of shoddy workmanship that allowed water to be wasted continuously. (pic 100_2032) In the late afternoon I met with staff from the CEO. We discussed the availability of some free project scheduling software and how that might be used for implementing CCPM concepts. The limiting resource is equipment not staffing. Spent 5 hours in the evening reviewing previous AUSAid reports that led to the WSDP. These reports repeat practically the same recommendations that I have made especially the need for safe disinfection. They also include extensive data for modeling the water system. Using that and the free EPANet software, I prepared a first theoretical analysis of the ICWS system. It clearly shows that continuous supply to most of the existing system can be provided by simply fixing some of the blocked lines and swapping the location of some of the proposed pipes. The major effect that has not been provided for in the proposed project is the tremendous pressure increase that will occur. If not corrected by installation of pressure regulating stations, this will cause widespread bursting of ICWS' and homeowners' pipelines. Friday 15 AUG The day was spent at ICWS. One effort was to complete building a chlorine gas diffuser using materials readily available in the ICWS yard. Then we went to install the unit at the Ditucalan source. Assignment Report Iligan August 08 7

This was a fiasco! First, the simple hose clamp that was requested was not obtained. (To highlight the dangerous nature of this setup, several individuals including me were gassed with chlorine during this effort. There was not one safety pack available.) Second, the line could not be installed with the preinstalled anchors; so those had to be removed. Third, contrary to directions, the gas was turned back on to both injectors. This led to there being a chlorine residual in both pipes so the improved effectiveness could not be quantified. The reality is that chlorine need not be added to the 18 inch line at Ditucalan and only a small amount needs to be added to the 16 inch line for the Buru-un supply. Most of the chlorine being added is dissipated before the water arrives it the City limits (Agus crossing). Beside the cost aspect, this unnecessary addition of chlorine has implications for pipeline life and water quality degradation. (pics 100_2211, 100_2215, 100_2216, 100_2217, & 100_2220) In the afternoon, we reviewed the various activities that need to be completed by November. These include: resolving the valve situation at Camague, unclogging the small diameter lines in the Hinaplanon area, installing the gas solution injection system near Global Steel, resolving the issue with line interconnection and chlorination at Ditucalan, continuing the effort to collect water payments by shutting off delinquent accounts, initiating efforts to understand why so many customers don't pay their water bill, and working with the PIU to incorporate the various recommended changes into the WSDP. As a final item, I noted the amazing transformation of the ICWS front parking area since March. (pic 100_1968) I issued a challenge to clean up top level of ICWS main office building before my return in November. (pics 100_1970, 100_1976, 100_1977, & 100_1979) This is not a 5S implementation, just a motivation to demonstrate the benefits of good housekeeping. In the evening, RCN and I met to discuss Architect Balondo's interest in applying TOC concepts to the C-3 road project. Saturday 16 AUG In the morning, CMO and I met for the terminal meeting on this session. We covered the progress and the areas that need continuing attention. We drove to Cagayan de Oro. My flight left at 15:00. Sunday 17 AUG Two inns in Iligan were bombed by insurgents. Some 50 people were killed in the hinterland. Thousands of people fled into Iligan reporting atrocities. Schools were closed for a week while those buildings were used to house the refugees There were threats on City Hall. Reports at the end of August and later indicate that tensions have reduced and the situation has returned to pre-August conditions. Post on-site efforts Communication with the ICWS has been sporadic through August and most of September. Early on this was attributed to the disruption caused by the civil unrest. A number of other things ranging from out of town meetings, electrical failure, annual budget, and fiestas/vacations have been reported as reasons for limited response from ICWS. I can readily accept that these are valid. I just need to develop an appreciation for a slower process. City Fiesta and the subsequent holidays will conclude on 1 OCT. It must be said that throughout the period, RCN has been consistently responsive as a contact. I suspect that not much would have happened without her excellent follow through.

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Excerpt from 9 SEP 08 email SUBJECT TO REVISION AFTER GETTING THE ICWS DATA..... - CAUTION: If you follow these recommendations, I fully expect that the pressure from Agus well into downtown will increase to close to 90 psi. That will cause many pipes to burst. DO NOT DO THIS until you are prepared to install a few pressure regulating stations. By the way, this will also happen if the current plan is implemented! I have designed a regulator station and am getting some cost estimates for the valves. -STRONG SUGGESTION: Before doing any pipelaying, install flowmeters in the 16" and 18" lines at the Agus crossing. As best I can tell, the entire design is based on assumed flow rates. That spells T-RO-U-B-L-E. (I have designed the complete layout including construction sequencing and am just waiting for ICWS indication of interest. Coincidentally, immediately before opening your email, I sent an inquiry to a flowmeter company to get data for this layout!) Recommendations: 0. Before doing anything new, get ICWS to dig up all the valves and piping around the Camague interconnection to determine why the 18" line pressure goes to zero when the 16" line on the other side of the street is shut off!!! This indicates that the 18" line is not delivering much (if any) water today. Just doing this may well raise the pressure beyond acceptable. 1. Relocate the 24" pipe that was supposed to run from Abaga to the National Highway (at a point I'll call A) to run from A to where the pipes interconnect near Camague. (Eventually, the 20" that was supposed to run from A to Camague will be installed from Abaga to the National Highway. Yes, the pipes as designed have the diameters backwards.) [If step 0 doesn't get sufficient water to resolve many of today's "no water" issues, step 1 will. Either or both can be completed in about 6 months from construction start.] 2.There are a number of possible steps: 2a. (my preferred) Install some of the 20" that should go to Abaga in the National Highway from A to the Agus crossing. Convert the dilapidated 16" line into a local service line for all the area from Agus to Camague - including Steel Town. (If my data are correct, the tank at Steel Town will fill by gravity, i.e. the present pump will not be needed. Only by relocating the recently installed Fuentes PRV will the tank not overflow!) The new 20" and existing 18" line will carry enough Ditucalan water to the City to meet the needs for the next 5 to 10 years. 2b. Just tie the 16 & 18 to the 24 at A. This has lots of negatives but will do pretty much the same as 2a 3. (I really need the ICWS data for this step) Install the proposed lines through the City. The pipes will run about where they are now proposed but there will be some significant differences in the way new lines are kept separate from the existing ones. 4. (Some day) build the Abaga structures and pipeline.

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SUPPLEMENTAL MATERIALS Documents/information collected during this on-site period and delivered in various ways are listed below. Materials forwarded by mail The Evaluation Forms for the Iligan August On-site Program are being forwarded by mail. The Program received uniformly positive reviews. The session sign-in sheets are also being mailed. They were generally not collected due to the working session nature of most of the meetings. Electronic documents submitted as separate files for this report IliganAug08RptPics1 (4 pictures by Pat Noel & RCN) IliganAug08RptPics2 (29 pictures by Tom Shoemaker)

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