Surabaya NRW Management Final Report

THE WORLD BANK
PDAM Surabaya
Non Revenue Water (NRW) Management Strategy for Surabaya Water Company
Final Report 2011 May 2011
Prepared by :
Ranhill Water Services Sdn.
Prepared by :
Ranhill Water Services Sdn. Bhd.

Head Office: Level 13, Wisma PERKESO 50400 Kuala Lumpur Malaysia Tel: +603 26855000 Fax: +603 26855102 Operation office: Level 4, Matang Building 83, Jalan Langkasuka 80350 Johor Bahru Johor, Malaysia Tel: +607 276 2020 Fax: +607 276 3030 Ranhill Water Services has prepared this report in accordance with the instructions of their client, for their sole and specific use. Any other persons who use any information contained herein do so at their own risk. Ranhill Water Services 31st May 2011
Contents
Introduction .....................................................................................................................................................1 Background of the Task ..............................................................................................................................1 Task Objectives ..............................................................................................................................................1 1 Introduction Proposed Implementation Strategy ..................................................................2 1.1 NRW Awareness Programs ...................................................................................................2 1.2 Production Metering ...............................................................................................................3 1.3 Customer Metering ..................................................................................................................5 1.4 Reservoir Overflow Control................................................................................................ 10 1.5 Inter-Zone Metering ............................................................................................................. 11 1.6 DMA Establishment .............................................................................................................. 12 1.7 Leakage Reduction Activities ............................................................................................ 12 1.8 Pressure Management ......................................................................................................... 12 1.9 Establishment of Control Room ....................................................................................... 15 1.10 Call Centre Improvement.................................................................................................... 17 1.11 Asset Maintenance Strategic Plan ................................................................................... 19 1.12 Recording of Operational Usage ..................................................................................... 24 1.13 Pipe Replacement Programme......................................................................................... 25 1.14 Staffing ....................................................................................................................................... 29 1.15 Customer Charter .................................................................................................................. 34 2 Financial Option................................................................................................................................ 36 2.1 Estimated Cost ........................................................................................................................ 36 2.2 Options for Implementing the Proposed Strategy for NRW Management ... 38 3 Cost Benefit Analysis ...................................................................................................................... 45 4 Conclusion .......................................................................................................................................... 53
Introduction
Ranhill Water Services Sdn Bhd (RWS) are pleased to submit the FINAL REPORT for Task 4 Preparation & Presentation of NRW management options, to the World Bank for the contract Non Revenue Water (NRW) Management Strategy for Surabaya Water Company. On the 6th September 2010, RWS was awarded a contract to develop a Non Revenue Water (NRW) Management Strategy for Surabaya Water Company in East Java, Indonesia by the World Bank. This contract is for a period of 34 weeks commencing from 6th September 2010 until 30th April 2011, with the expected outcome is the delivery of a strategy for the management contract of NRW across the city, which can be used by PDAM Surabaya as a template for future investments and development. This document details RWSs Activities to the World Bank / PDAM Surabaya to complete the said works.
Background of the Task

Based on the results of the assessment of components for water loss in Surabaya city, review of PDAM Surabayas current water loss management practices and system features and establishment of DMAs for pilot study purposes in Surabaya City, a Non Revenue Water (NRW) Management Strategy will be prepared for the entire city. This strategy will include the implementation strategy to deliver the proposed network management and holistic NRW management program, NRW management options and recommendations, to further improve Surabaya citys NRW situation. For this task report, RWS aims to create a best practice document report, detailing the most suitable and efficient means of undertaking an NRW management strategy for the city of Surabaya. This task report will also ensure that all components of NRW are covered and that the proposed strategy is feasible in terms of physical application and financial requirements.
Task Objectives
The objective of Task 4 Preparation & Presentation of NRW management options is to: Propose an Implementation strategy to deliver the proposed network management and holistic NRW management programme. Prepare NRW management options and recommendations feasible in terms of physical application and financial requirements to further improve Surabaya citys NRW situation
Non Revenue Water (NRW) Management Strategy for Surabaya Water Company 1
To create a best practice document report detailing the most suitable and efficient means of undertaking an NRW management strategy for the city of Surabaya.
Task 4 - Preparation & Presentation of NRW Management Options 1 Introduction Proposed Implementation Strategy
The following strategies, comprising 15 main activities, are recommended for PDAM Surabaya to undertake network management and holistic NRW management program: NRW Awareness Programs Production Meter Accuracy Customer Metering Reservoir Overflow Control Inter-Zone Metering DMA Establishment Leakage Reduction Activities Pressure Management Establishment of Control Room Call Center Improvement Asset Maintenance Recording of Operational Usage Pipe Replacement Programme Staffing Customer Charter
1.1 NRW Awareness Programs

Many water companies that embark on NRW reduction management tend to create a dedicated NRW team with varying responsibilities. Some concentrate mainly on leakage detection, whilst others may undertake additional activities aimed at managing other NRW components. Unfortunately the setting up of these dedicated teams can sometimes have an unintended negative effect. This is mainly due to the remaining water company staff feeling that NRW is the sole problem of the NRW team and therefore mitigating any responsibility they have to helping with managing the NRW levels. In reality NRW is a company wide responsibility, with each member of the organization having a role to play in reducing NRW. Whether its the meter reader, who should read all his meters within a set time period while on the look out for any anomalies with the meters, or the procurement executive, who is responsible for ensuring that all contracts, materials and equipments arrive expediently and of the correct quality, or all other staff within the organization who all have significant roles to play.
To overcome the above pitfall, an NRW awareness program is proposed to be conducted to instill the basic knowledge on NRW, importance of NRW to the water company and appreciation of the benefits of NRW reduction and savings to long-time employees of the water company, as well as new joiners. The awareness sessions will impart to every personnel his or her roles and responsibilities toward achieving the reduction in NRW level. The proposed staff awareness programs are aimed at all PDAM Surabaya staff and are suggested to follow the following schedules. Each session will be conducted in a small group to ensure the contents of the program will be effectively delivered. It is also suggested that the awareness sessions be conducted according to levels of understanding to ensure that the information is well disseminated to all employees. The awareness sessions will be conducted separately according to the following sectors within the PDAM organization: Top Management and Senior Personnel Engineers and Executives Technicians and Clerical Staff Laborers, Field Assistants and Meter Readers
These awareness sessions will take at least a full day for Managers and Executives and a half day for the other employees. The sessions are recommended to be conducted outside of PDAM Surabaya premises to ensure undivided attention is given by the staff involved.
1.2 Production Metering

The accurate measurement of the production volume is an essential part of the calculation of NRW. Accurate meters have been installed on all of the water treatment plant outlets but not all of these meters are being verified / validated annually to ensure they are maintaining their accuracy. During the Production Meter verification exercise in Task 1, 6 meters were found to physically not satisfy the minimum required distances (10D upstream, 5D downstream) from the nearest obstruction which resulted to inaccurate readings due to disturbance of their flow regime. The Production Meter verification results also showed that 10 meters are outside the manufacturer specification for accuracy range. The results showed that these 10 meters range from (-) 6.4% up to (+) 93.0%. Most of these production meters in Surabaya are of Electromagnetic insertion probes type. Based from the results of Production Meter verification exercise, it is recommended to replace all probe insertion meters with full- bore fixflanged electromagnetic meters which have four flow sensors attached inside the meter body. The full- bore fix-flanged electromagnetic meters have the following advantages compared to probe insertion meters:
The installation of the full- bore fixflanged electromagnetic meters does not affect the sensor which captures the flow readings. For probe insertion meters, the accuracy can be affected by the installation of the probe and location of sensor (1/2 or 1/8 of the pipes internal diameter, horizontal or vertical position). Below shows the typical diagrams of probe insertion meters and full- bore fixflanged electromagnetic meters installation:
If the installation of the probe is not completed properly, for example through inaccurate data relating to the pipe, such as thickness of
cement lining or actual diameter, the accuracy of the flowmeter will significantly decrease. Electromagnetic fix flanged type meters accuracy range is (+/-) 0.5% compared to probe insertion meters 3.0 -3.5% when installation is done properly. No moving parts and less maintenance
It is also recommended that works be carried out to verify the accuracy of all production meters periodically. Methods for verification and validation of production meters need to be established to ensure that all production meters are reading correctly. For longer-term recommendation, it is suggested that PDAM Surabaya undertake meter verification on yearly basis for all production meters using a portable ultrasonic clamp-on meter. This type of flowmeter is good for flow surveying and verification purposes; however this is not recommended for permanent installations. The portable ultrasonic clampon meter is to be wet-tested as accurate at a known test site.
1.3 Customer Metering

Customer Tagging and Survey NRW is a comparison between production volume and customer billing. Therefore the accurate measurement through customer surveys, and subsequent billing of customer consumption, is essential in measuring and ultimately controlling NRW. These customer surveys will involve a team of surveyors walking the designated DMA, interviewing and surveying all properties within. Standard survey forms will be utilized in the survey. Among the items that will be investigated during the survey are: Type of properties Activities of properties Meter availability Meter registration Meter condition Illegal connections Meter tampering
These surveys will enable PDAM Surabaya to identify customers that are inside their designated DMAs, faulty customer meters, illegal connections, wrongly sized customer meters, tampered meters and possible new customers.
The next step after conducting Customer tagging and surveying is to undertake a study of the existing customer meters. The customer meters must be tagged according to model, size, period of service (age of meter) and location (name and address of the customer). This information should customer). be presented in tabulated form such as the example shown below:
Customer Information Customer Customer Identification Street Name Number Meter Information Meter Model Meter Type Meter Size Period of Services
No.
1 2 3 4 5
Customer Meter Accuracy Test Customer meter accuracy testing can be performed on on-site at the customer premise or at a testing facility. When testing a meter on on-site, the methodology is to compare the accuracy of the meter being tested with a calibrated meter tester used in the process process. Meter accuracy tests conducted at a test facility usually offer better validated results since the volume of water passing through the meter (s) being tested flows into a tank of known volume. Therefore the test process is well calibrated, since the volume passed through the meter is known precisely. Below is a photograph showing a typical water meter test bench for customer meter accuracy testing:
Random selection of meters according to model, size, period in service and location will be returned to the meter workshop for accuracy testing. Customer meters that are suspected to be inaccurate during customer surveys will also be subjected to an accuracy test.
Large customers will be randomly tested on-site using temporary ultrasonic clamp-on meters suitable for small sized pipes (4-6 inchdiameter). Based on the results of the accuracy test, average meter inaccuracy values (as % of metered consumption) will be established for different user groups. Techniques for performing the test, selecting the appropriate test flow rates, determining the accuracies, and reaching conclusions must be known and carefully followed to obtain valid test results. For positive displacement meters, which are typically the small residential meters, the AWWA M6 publication provides the three flow rates (low, mid, and high), which apply to all brands. For turbine and propeller meters, which are used in large meter applications; either M6 publication or the manufacturers meter literature must be consulted. Below is the table showing recommended test flow rates:
Meter accuracy Water meters can be damaged and deteriorate with age, thus producing inaccurate readings. Inaccurate readings will give misleading information regarding water usage, make leak detection difficult, and result in lost revenue for the system. All meters, especially older meters, should be tested for accuracy on a regular basis. The system also should determine that meters are appropriately sized. Meters that are too large for a customers level of use will tend to underregister water use. Meters should be able to accurately record the full range of expected flow rates. Establishment of a Customer Metering Management Plan This section provides a roadmap for PDAM Surabaya in planning, implementing, operating, and managing a metering plan to account for use and loss in the water distribution system. This will also provide key considerations to help PDAM Surabaya assess their priorities in developing a meter management strategy.
In addition to addressing the management of existing customer meters, some percentage of new batches of meters supplied by supplier to PDAM Surabaya are recommended to be tested for accuracy before being allowed to be installed on customer premises. Small Residential Meters With the existing water meter testing facility, PDAM Surabaya can randomly select more customer meters according to model, size, period in service and location to be returned to a meter test facility for accuracy testing. The meters that have been taken out of service and brought to the water meter testing facility will be replaced with the new ones that have been factory tested and certified for accuracy. To maintain the accuracy of the meters in service, a dynamic meter replacement programme is also recommended whereby meters in residential premises are replaced based from the results of customer meter testing activities. The implementation of customer meter accuracy testing will also help to develop an optimum lifespan based on meter age, extent of usage and type of the customer meters prior to their replacement. It is recommended that a stopcock before a customer meter for new installations be located on the area accessible to meter readers and leakage detection teams. This will enable the meter readers to access and make proper readings of the customer meters. For the leakage teams, the stopcock before the meter can be utilized to sound for any underground leak noise occurrence. It is strongly recommended that these be implemented for new installations and during a meter replacement program whilst for the other existing meters be replaced gradually. Large Customer Meters Proper selection and maintenance of this large customer meters is essential due to its potentially large impact on PDAM Surabayas revenue. A Large Customer Meter is defined in this report as any meter with a line size of 38mm (1.5) or greater typically Industrial, Commercial and Institutional users. Evaluating Maintenance and Testing Program for Large Customer Meters The following items are to be considered when evaluating a Maintenance and Testing Program Volume: Large volumes of water = large revenues
Servicing: Large meters should be serviced at a minimum every 6 months, Age: Large meters should be tested at a minimum every 5 years, Water Quality: Zones with harsher water conditions should consider increasing frequency of meter maintenance Higher priority old and large meters More frequent tests an error in the registration has a greater effect on equity, utility credibility, and revenue issues Desirable to test in-situ (problems with meter setting or installation that could affect accuracy are quickly identified)
Large Customer Meter Replacement Customers consuming large volume of water should be ranked as Top customers. PDAM Surabaya can determine the numbers of Top Customer to be monitored closely. It is very important that these customers are monitored and measured as accurately as possible since they will have the biggest impact to NRW and revenue to PDAM Surabaya. The full- bore fixflanged electromagnetic meters are considered the most accurate at present as they contain no moving parts, which can fail over time, have less maintenance, are not affected by water quality and they can record at much lower flow rates as compared to mechanical equivalents. RWS is therefore recommending that the top customers within PDAM Surabaya have their large customer meters replaced with full- bore fixflanged electromagnetic units to improve consumption measurement. It is expected that these meter replacements will lead to an increase in overall company revenue and thus a reduction in NRW. When using these meters it is important that these meters are checked regularly for the battery replacement and all the electronic communication. Recommended Customer Meter Testing Provisions Review consumption history (look for over or under sizing) Potential sizing issue conduct a building inspection or detailed profile in the existing meter. If sized incorrectly change the meter to proper size If sizing is not an issue: Test meter using a portable ultrasonic clampon meter unit (at various flow rates). Compute a weighted accuracy based on the average recorded volume. If test results determine the meter is outside acceptable accuracy limits, replace or refurbish the meters. If the meter is refurbished, complete another accuracy test to ensure the service work has corrected the meter error within acceptable accuracy limits
Ensure all test results and servicing are properly logged and recorded for future purposes.
The activities mentioned above can be completed in-house by PDAM Surabaya or outsourced to another Contractor with suitable experience in conducting the said works. Meters should be recalibrated on a regular basis to ensure accurate water accounting and billing. Calibration will provide PDAM Surabaya with valuable information on the accuracy of the quantity of water being supplied, leading to appropriate decisions on maintenance or replacement frequency. Meters with results beyond accuracy limits with reference to the table above should not remain in service unless repaired.
1.4 Reservoir Overflow Control

Overflows from reservoirs are one of the major contributors of NRW however they can be easily quantified and reduced. Water utility companies can observe overflows then estimate the average duration and flow rate of the events. It is essential to continually monitor reservoir levels and to effectively eliminate reservoir overflows. It is understood that PDAM Surabaya has only few reservoirs in their water supply system which are being supplied by pumping stations. Installing continuous reservoir level monitoring (Remote Monitoring System using SMS technology) at all of these reservoirs will be worthwhile as not only can PDAM monitor reservoir overflows, this data can also be integrated to an alarm/warning system (Hi-Level or Low Level Sensors) to automate the controls of the pumping stations to ensure the optimum operation of the pumps in service. This system will enable PDAM Surabaya to continually monitor its reservoir levels, effectively operate the pumping stations and effectively eliminate reservoir overflows. As with all electronic systems it is important to verify their functionality on a regular basis to ensure that they are working correctly. RWS recommends PDAM Surabaya to setup a dedicated reservoir monitoring team equipped with necessary tools, to undertake periodic maintenance at least twice a year of the reservoir level monitoring equipment, to ensure its functionality. It is also recommended that the reservoirs in Surabaya city will have control valves installed at their inlet pipes to control the level of the reservoir, thus totally ensuring no overflows. The reservoir monitoring team will undertake regular visits to each reservoir to undertake maintenance of the control valves and to check the status of the reservoir level sensors.
10
1.5 Inter-Zone Metering

According to the Task 2 report, PDAM Surabaya has already divided their billing areas into 5 major zones which are named as zone 1 to zone 5. However, according to the latest operational data from PDAM Surabaya, there are 6 zones and the additional zone is labelled as zone 0. These zones were purposely created to manage the monthly meter reading and which later could be compared with the total inflow into the zones. These large zones have been divided into smaller subzones to facilitate the creation of DMA set up. To determine the NRW levels of high level water supply system of the Surabaya city, it is recommended to install permanent meters at the inflow and outflow of every zone. By doing so, the over-all water balance of the water supply system can be calculated; zones with high losses can be identified and/or prioritized for NRW reduction activities. Below is the tabulated summary of Surabaya Zone Information:
Propose Supply Number Number Number of Hours of Inlet of Outlet DMAs 24 20 21 15 23 24 1 52 73 46 68 86 326 8 4 8 7 11 38 2 5 4 9 3 23
Zone 0 1 2 3 4 5 Total
Zone Connection 914 62268 87887 54631 82002 102652 390354
Inlet & Outlet
10 9 12 16 14 61
The proposed permanent meters will be of full-bore fix-flanged electromagnetic type fitted with SMS data loggers that will transmit data to PDAM Surabaya operations office for continuous data monitoring.
11
1.6 DMA Establishment

In Task 3 (DMA Pilot Study), DMA establishment procedures, NRW data analysis and leak detection techniques were demonstrated and two pilot DMAs were successfully established. It was also identified within the Task 3 report that the volume of water lost and baseline NRW levels of the 2 pilot DMAs are: For DMA 202A is 1,652 cubic meter per day (19.12 liters per second) or 46.4 % For DMA 109A is 1,011.25 cubic meter per day (11.70 liters per second) or 46.93 % Given the successful establishment of the 2 pilot DMAs, it is recommended that the procedures formulated in Task 3 DMA Pilot Study under section 1. DMA Establishment to be replicated in the 326 proposed new DMAs within Zones of PDAM Surabaya and follow the procedures outlined in the attached OPERATIONAL MANUAL FOR DMA ESTABLISHMENT.
1.7 Leakage Reduction Activities

NRW reduction activities proceeded after successfully establishing and analyzing DMA 202A and 109A. Leak localization was undertaken using Step-Testing and leaks were found using Visual and Sounding methods with the aide of Ground Microphones. It is recommended that the activities undertaken in the task 3 report 1.8 NRW Reduction Activities to be done on the 326 DMAs that will be established.
1.8 Pressure Management

The results of Task 3 (DMA Pilot Study) showed that Pressure management is not feasible to be implemented as the pressures within DMAs 202A and 109A are at a low range. However, for the zones which are having excessive pressure, there is still potential to reduce the leakage by managing the system pressures. Below is the tabulation Average Pressures reported within the 6 zones of Surabaya city and the pressure distribution map of Surabaya city water supply system:
12
Zone
Zone Connection
Supply Hours 24 20 21 15 23 24
Average Pressure 25 9 11 4 11 5
Propose Number of Number of Number of Inlet Outlet DMA 1 52 73 46 68 86 326 8 4 8 7 11 38 2 5 4 9 3 23
Inlet & Outlet
0 1 2 3 4 5 Total
914 62,268 87,887 54,631 82,002 102,652 390,354
10 9 12 16 14 61
13
14
Pressure management has increasingly become popular and cost effective method to conserve network assets and water. It is recommended to PDAM Surabaya to use hydraulic models in designing Pressure Management Areas. However, if funding is insufficient for a complete hydraulic modelling and NRW is still high, then building models of Pressure Management Areas will allow hydraulic models to be built in stages, at a lower annual cost. This can be done by conducting pressure surveys for the whole water supply network of Surabaya city specifically targeting feeder primary mains and large secondary mains. Upon determination of areas in the water supply network with excessive pressure compared to average network pressure, pressure regulating valves (PRVs) and system monitoring points will be recommended to be installed to achieve more consistent and lower water pressure levels across the water supply network. In some areas where one-time pressure reduction will not be applicable due to very low pressures during peak hours of the day or times where usage of water is at the highest, PRVs with a timed controller is recommended to optimize pressures within the network. The establishment and progressive introduction of Pressure Management Areas in the water supply system of Surabaya will have immediate and long lasting benefits as follows: Extend pipe life reduce leakage reduce pipe burst frequency
1.9 Establishment of Control Room

The monitoring of the individual DMAs, through SMS data loggers is important in the sense that it will alert PDAM Surabaya immediately if a problem occur and will potentially reduce the subsequent time to locate and repair. This continuous monitoring and alert system will ultimately reduce the volume of water lost in the water supply system. The control room is an integral component of the NRW reduction strategy implementation as it will act as the nerve command center where all field
15
information will be collected, analyzed and responded. It will perform, among others, the following functions: Data logger setting up Data gathering from all SMS loggers Data logger monitoring Analysis of Data logger results Monthly reporting of NRW data
It is proposed that under in this strategy a central control room be established within PDAM Surabayas operational office. This control room would be equipped with the following equipment: 2 Nos. 2 Nos. 4 No. 2 No. 1 No. Server PC Digital Modems Data Logger Software A3 Color Printer
Shown below is at the schematic presentation of data gathering and transmitting process through SMS loggers:
Mobile phones
GSM Network Alarm Alarm
GSM Modem MultiLog SMS PC Server
Data storage Data storage
Graph Graph
Data Analysis Data Analysis
Pressure & Flow meter
Field display, read using PDA/Notebook PC
In addition to the above technical equipments, all necessary furniture, soft boards and white boards must be provided to ensure smooth operation of the proposed control room. Office space for the above must be allocated by PDAM Surabaya and installation, renovation and electrical works shall be provided as well.
16
This control room can also be used as the maintenance and updating station for any GIS and network modeling systems within PDAM Surabaya.
1.10 Call Centre Improvement

PDAM Surabaya has an existing Call and SMS centre to receive the feedback and complaints from consumers. Below is the existing contact information for Call and SMS Centres:
The complaints received are compiled and then forwarded therewith to the respective departments recipient of the complaint. The brief description of PDAM Surabayas existing Call Centre facilities is described below: Computers: 9 nine units Mode of Communication: Phone and SMS Manpower: 32 personnel (included outsourced staff)
The following items are recommended to be included into PDAM Surabayas existing call centre facilities to enhance the flow of information and data management: Server/back up server : 1 number server / backup server for the purpose of data storage and integration to other Business/Company Information Systems Multimedia : Projector for Bulletin Information/Urgent Matters (1 unit) Wide Screen Monitors : LCD 42" (at least 3 numbers) Printer : A3/A4 laser jet printer for output printing and filing (1 number)
With the proposed improvements in the existing call centre, advancements to the the current system can be completed to expedite addressing customer complaints, especially those cases related to water theft and
leakages. One initiative proposed for this strategy is integrating the existing Call and SMS centre with a Job Management System (JMS) and establishment of a Panel of Accredited Contractors or In-House Maintenance/Leak Repair Crews. Below is the conceptual diagram of the proposed improvements for the existing Call and SMS centre:
CUSTOMER COMPLAINT
Customer call the Call Center to lodge complaint. With every complaint customer will receive a report number for future number reference.
Leak Repair Crew/Panel Contractors At Work
Log-in calls Logand assess situation for further action

On-Line Thru JMS
CALL CENTRE
Instruct Maintenance Units
Maintenance Units instruct Leak Repair Crew/Panel Contractors to do Work
Inform Maintenance Units once problem resolved (closed case)
Inform Call Center if the job is completed

Maintenance Units
Job Management System Job Management System (JMS) is an IT system that provides a database to record and manage information, feedback and complaints from customers. JMS also creates work orders and job status. The Jobs are re-routed to the various Maintenance Units located at all areas for actions to be taken. Information from JMS can be used for evaluation, planning and decision making
18
Below shows sample photographs of Call Center and JMS Activities:
Panel of Accredited Contractors or In-House Maintenance/Leak Repair Crew Maintenance and leak repairs can be either outsourced to qualified contractors or can be done in-house by PDAM Surabaya. To ensure quality and speedily completion of works all contractors undertaking works will be approved in prior by PDAM Surabaya. All leak repair and construction works will be undertaken using methods & materials to PDAM standard specification. PDAM construction and installation supervisors will ensure that all works and leak repairs are undertaken, and materials supplied meet these standard specification. The performance of each contractor is also recommended be monitored and periodically assessed to ensure that they have valid contractor licenses or accreditation and they are suitable to undertake further works. Another option is the establishment of In-House Maintenance/Leak Repair Crew within PDAM Surabaya. Though less advantageous in terms of speed of completion and overheads compared to outsourcing; establishment of an in-house maintenance/leak repair crew will have its own advantage in terms of quality control and quality assurance.
1.11 Asset Maintenance Strategic Plan

Having determined that part of the asset base which continues to support service delivery and the risks that these assets pose to the ongoing service delivery, the department is equipped to develop the Asset Maintenance Strategic Plan. The Plan will determine the work required to efficiently and effectively address the risks of asset ownership and their impact on service.
19
Some part or components of the asset will fail before others. Timely attention to these repairs can allow the remainder of the system to continue in service. Maintenance slows the overall deterioration of the asset by restoring the condition of its short life components and allows its overall full service life to be achieved. Asset maintenance levels should ensure the asset continues to support delivery of existing service levels. Benefits of Asset Maintenance Planning Asset Maintenance planning is a detailed assessment of those assets or asset segments, which require only strategic maintenance in order to satisfy the delivery of service. It is also a detailed functional analysis of maintenance needs aimed at ensuring assets remain productive at the lowest possible long-term cost. The benefits to company as a whole are:
Assets perform at optimum levels, reducing service disruptions and losses due to asset failure Asset repair or replacement can be compared to best suit service delivery needs The lifespan of assets can be prolonged
System Maintenance Many of the NRW losses that arise can be prevented through preventative system maintenance. The following preventative system maintenance activities should be undertaken by the relevant operational departments within PDAM Surabaya as detailed below: All Production meters to undergo electrical functionality and volumetric accuracy tests once a year Each production meter is recommended to be tested for both electrical functionality, where necessary, and volumetric accuracy, at least once a year. These tests can be carried out by either externally approved contractors or internally by PDAM staff using valid testing equipment. All air valves to be serviced at least once per year The good operation of air valves is an essential part in reducing pipe bursts. To ensure that PDAM Surabayas air valves are operating efficiently, they should be serviced at least once per year. This servicing will involve dismantling the air valve, cleaning all of the parts and replacing those that are deemed too worn or are broken. All valves to be operated every six months Most isolation valves operate at the fully open position and are only used during emergency or repair works. To ensure that these valves
20
remain operationally sound they should be operated once every six months. Due to the large size of some of these valves, it is recommended that PDAM use automatic hydraulic valve operators. These will reduce the time taken and necessary manpower to operate each valve. During this operation any faults to valve, broken spindle, leakage, nonclosure, etc, should be reported immediately or if possible rectified on site. Those valves reported as faulty should be repaired or replaced immediately. All control valves to be serviced every six months To ensure correct operation of PDAMs control valves (PRV or Altitude Valves) it is important that they are serviced every six months. This servicing will involve dismantling and cleaning of the main valve body, any pilot valves and the strainer. During this operation any faults to the control valve, broken diaphragm, damaged pilot, etc, should be reported immediately or if possible rectified on site. Those control valves reported as faulty should be repaired or replaced immediately. To ensure speedy rectification of any reported faults, it is recommended that a stock of essential spare parts be maintained at each of the district stores. All reservoirs to be tested for leakage once every 3 years Reservoir leakage can become a significant component of NRW if not detected quickly and remedial works undertaken. Some reservoir leakage can be easy to locate with visible water leaks from the walls or base, if an elevated tank. However many reservoirs are located at ground level, where leakage from the base cannot be easily seen. To check for leakage in these cases a reservoir leakage drop test can be undertaken. It is recommended that a reservoir leakage drop test be undertaken for each reservoir at least once every 3 years. All reservoirs to be cleaned at least once every five years As well as being a common source of customer complaints, dirty water can have a serious effect on the accuracy of PDAM Surabaya customer meters. Sediment particles in the water can build up within the meters mechanical parts and significantly reduce their accuracy. The sediment particles, which enter the system through leaks, bursts, poor treatment processes and open reservoirs, need to be removed in all areas of the system.
21
Reservoirs are an area where the water velocity reduces suddenly, causing any particles to sink to the bottom and build up. This build up of sediment needs to be removed, by cleaning the reservoir at least once every five years. All consumer meters of size of 38mm (1.5) or greater in size to be physically serviced at least once per year Each meter will be dismantled and the parts thoroughly cleaned. Upon being dismantled, if the meter appears to be broken, then it will be replaced immediately. All customer meter isolation valves operate in the fully open position and are only used in emergency or repair works. To ensure that these valves remain operationally sound they should be operated once every six months. During this operation any faults to valve, broken spindle, leakage, nonclosure, etc, should be reported immediately or if possible rectified on site. Those valves reported as faulty should be repaired or replaced immediately. In addition the strainer will be dismantled and thoroughly cleaned. If the strainer cannot be dismantled due to severe encrustation of deposits, the strainer should be replaced immediately. All consumer meters of below size of 38mm (1.5) to be physically tested, based on receipt of a customer complaint or based on results of customer meter accuracy tests. Each meter will be disconnected and taken back to the meter testing lab for testing of accuracy. Upon being disconnected, if the meter appears to be broken, then it will be replaced immediately. Periodic mains flushing, at least once a year, to reduce scaling inside the pipes and improve distribution water quality system As with reservoirs, sediment particles can enter the distribution system through leaks, bursts, poor treatment processes and open reservoirs. These sediments can cause scaling inside the pipe walls and therefore need to be removed in all areas of the distribution system. Periodic mains flushing has been proven as an effective method in improving distribution water quality and is therefore recommended to be included in the routine asset maintenance programs of PDAM Surabaya.
22
Capital Project Planning PDAM to develop a ten year capital planning program All of PDAM Surabayas assets were designed with a specific design life. These design lives will differ depending on type of asset, material, quality of installation and extent of any maintenance programs. The capital expenditure required to replace assets, once they are no longer operationally sound, can be quite large. To ensure that assets do not become a financial or technical burden to PDAM Surabaya, it is proposed that a ten year asset replacement program be developed. The proposed ten year capital planning program will be the master plan which shall be reviewed and revised every 3 years. The 3 years will be the medium-term planning which will schedule impending major tasks and asset downtime (new and refurbished) programs, resources and will be the basis for Company budgeting and business plan. This program will also enable the analysis of all PDAM Surabaya assets and determine expected operating life and thus expected time of replacement. From this analysis, a year by year program can be made of what will be required to be replaced. The asset replacement program can then be used to plan budget and human resource needs over a ten year period, providing invaluable data during tariff negotiations. GIS Updating and Network Modelling On top of developing Asset Maintenance Strategic Plan the following initiatives will also help maximize the useful life of PDAM Surabaya water supply system assets and improve operational efficiency: GIS Updating Network Modelling
An accurate GIS map to be made readily available, for all appropriate PDAM staff Most of PDAM Surabaya pipes are below ground and as such can be difficult to locate exactly. The use of accurate maps is essential in reducing the time to locate mains and reduce the amount of water lost. GIS mapping is an ideal method of managing up to date and accurate maps of the pipe network. These GIS maps have a background map, showing roads, properties, etc, making locating of pipes, in relation to roads and properties, very easy.
23
It is recommended for PDAM to ensure that their GIS data is up-todate to reflect the true representation of their assets and water supply system. Calibrated Network Models to be built for all areas of water supply system Understanding how the supply system operates is essential when analysing any flow or pressure data. A calibrated network model will assist greatly in this analysis and help to pinpoint the location of any system anomaly. It is recommended for PDAM to construct, calibrate and maintain a series of Network Models encompassing all mains of their water supply system. A calibrated network model will also give the following benefits to PDAM Surabaya: Identification of network issues, particularly in terms of NRW, supply and pressure anomalies Improved understanding of Network Operation / System Optimization Useful tool to manage / improve operation of the network (DMA and PMA Design) Useful tool for NRW reduction and Operations (leak localization) Useful tool for water infrastructure/asset planning and future demand impact analysis Useful tool to simulate different scenarios on the water supply system to determine the impact that these changes may have in terms of flows, pressures, water quality, proposed area developments etc.
1.12 Recording of Operational Usage

It is essential for PDAM Surabaya to maintain proper records or water consumption that is intended for operational purposes. It is also important to determine the users and different types of usage to enable operational usage to be segregated from the total NRW of the system and not considered as unaccounted losses. It is recommended that daily records of consumption for operational usage is recorded by the relevant parties and have the consumption summarized on a monthly basis. The monthly records shall be kept and organized in the proposed PDAM Surabaya Control room.
24
Below is a sample of tabulation to account for billed/unbilled, metered/unmetered operational usage.

No. Type of Usage Estimated Volume of Usage (m3) Duration of Usage (days) Volume of Usage (m3 per month)
Maintenance of Pipe Distribution System or Mains Flushing 2 Reservoir Cleaning Fire Fighting and Fire 3 Hydrant 4 After Leak Repairs Public Sanitation and 5 Sweeping Activities Water Used In PDAM Surabaya District 6 Offices and other Government Facilities 3 Total Volume of Water Consumed (m per month) 1
1.13 Pipe Replacement Programme

Pipe replacement is a continuous process as every year pipes get older and deteriorating. Pipe replacement program is a necessity and it is advisable that PDAM Surabaya needs to allocate certain amount of budget for each year for the purpose of pipe replacement. Sections of pipe network to be replaced can be determined every year based on records, information and conditions set. To conduct a pipe replacement programme, it is important to initially determine the state of all assets in the system, initially through a network condition assessment. Condition assessment methods can be classified into direct or indirect methods: Direct methods include visual inspection, for example using CCTV cameras. Typically a 1 meter long pipe sample is exhumed every 1 km. The sample is cut in half; sand blasted to measure wall thickness and performs a variety of material tests and analyses. Direct methods also include non-destructive testing techniques such as acoustic emission, acoustic leak detection, remote field eddy current (used for cast and ductile pipes), remote field eddy current-transformer coupling (used for concrete pipes), magnetic flux leakage, ultrasonic pulse echo and guided Lambda waves, as well as seismic methods such as impact echo and spectral analysis of surface waves.
25
Indirect methods include analysis of failure history (i.e., breaks frequency or bursting rates), water audits to determine leakage levels, and flow testing to determine capacity.
The results of these assessments can then be used, along with available up-to-date GIS Data, calibrated network models and future demand requirements, to develop a comprehensive plan which can help to reduce the level of losses within the system, whilst ensuring there is the capacity to meet all demands now and into the foreseeable future. Through the replacement or rehabilitation of pipes in the system, not only will the total volume of water lost be significantly reduced, but also costs associated with future inspections and active leakage control will be lower. It is commonly recognized that there is a standard distribution of the frequency at which pipes burst on the network, with a small proportion of pipes bursting at a high frequency, while other areas of the network burst at a much lower frequency. To give the greatest impact on reducing leakage, it is important to identify those pipes which have a high frequency of failure and target to replace these first. The benefit of replacing other pipes within the system will be lesser, leading to a reduced level of leakage reduction, and based on the law of diminishing returns, this will eventually lead to point where it is no longer economical to replace pipes. It is recommended for PDAM Surabaya to therefore, undertake a programme to first identify the areas of high frequency, and thus ensure that the maximum benefits, both in terms of reduced losses and economical efficiency will be obtained. There are number of reasons that a pipe needs to be replaced or rehabilitated and these include: High break or leakage rate High occurrence of leaks on joints Encrustation or corrosion, leading to high head losses Inability to meet demands Structural reinforcement Threat to life or property due to failure
The first stage when undertaking pipe replacement is to identify a list of pipelines / areas to be replaced. PDAM Surabaya shall then prioritize this list for pipeline replacement based on a number of criteria. In addition, pipelines within established Zones or DMAs may be identified for replacement where the frequency of failure is high. In such cases, pipe replacement will be carried out. Volume saved after pipe replacement programme will be measured and accounted for as savings in physical loss. The selection criteria pipe replacement shall be as follows: The frequency of leaks and burst along a pipeline
26
Cost of replacement Failure profile General pipe condition Existing pipe location Age of assets
Pipe replacement and rehabilitation methods

There are a number of methods that can be used to replace or repair the pipe work in the system, and determining which method will be proposed for a particular location will be influenced by a number of factors including the original pipe material, asset condition and geographical location. The methods that can be considered for repairing/replacing the pipes are listed below: Open Cut Pipe replacement Sliplining Pipe Bursting
Open Cut Pipe Replacement

Open trenching or mains replacement is the traditional method used to replace existing assets in the system. This technique simply involves excavating to uncover the existing old pipe, removing the pipe from the ground, and replacing it with a new pipe and service connections. This method is however a very costly technique in many urban areas and is also impracticable as it often requires the closure of busy and sensitive roads to the public. This technique does often solve large losses to the system, and in some cases is the only technique available, however if other methods to repair or rehabilitate the network are applicable, these will often take precedence due to the costs and impact issues mentioned.
Sliplining
Slip lining is a form of trenchless technology, which is one of the simplest no dig techniques available. Using this methodology, the inside of the old pipe is cleaned out, and a new pipe is drawn or pushed through the old one. This new pipe is of a smaller diameter than the existing pipe. Once this new pipe has been laid, small excavations will be required at the service connections so that they can be reconnected. With this technique, the diameter of the pipe will be reduced, and therefore it is vital that the hydraulic carrying capacity must be
27
analyzed to ensure that the pipe system will remain sufficient to meet the existing demands or any potential future demands.
Pipe Bursting
Pipe Bursting, also known as pipe cracking is another trenchless technology, which is often used in situations where the hydraulic carrying capacity of the system needs to be maintained or even increased. Using this technique, the existing pipe is prepared and then a conical wedge is drawn through ahead of the new pipe. In this way the old pipe is used as a guide for the new pipe, however as the new pipe is larger than the internal diameter on the old pipe, this will force the old pipe to break or burst.
Connection and Communication Pipe Replacement Works

Connection pipe replacement will be a major leak reduction strategy because it is expected that there will be many leaks on the service connections, often at the tapping point. The location and repair of the leaks will result in a reduction of physical losses but also will eliminate many leak noises that will then facilitate location of any pipeline leaks in the water supply network. Leaking service connections will be entirely replaced, including the pipe saddle and the service pipe up to the meter up-stand. All connections will be subsurface, to reduce the potential for illegal tappings and breakages.
Construction Control & Supervision

All site works and leak repairs must be overseen on site by PDAM Surabaya representatives. This will ensure that the correct procedures are followed at all times, and that the correct materials and tools are used. It is also important to ensure that none of the assets are leaking upon installation and that all interconnections are undertaken correctly. In order to ensure there are no leaking joints or pipes, all assets will be pressure tested before being commissioned. This will be undertaken through visual inspection and results from pressure and leakage tests by trained PDAM Surabaya construction supervisors on site at the time of pressure testing, with photographs used as a means of recording any leaks or faults in the new pipe work.
28
1.14 Staffing
Organisation Chart
The next page shows proposed Organizational Chart for the NRW Reduction Department of PDAM Surabaya to undertake holistic NRW Reduction:
The proposed NRW Reduction Department for NRW Surabaya will be under the office of the President Director who will oversees the whole operations. The Distribution Director will provide the over-all direction and leadership of the department. The department will be managed by NRW Senior Manager who will monitor the progress and delegate the tasks to four main sections which are the following: Data Analysis Section Establishment Section Active Leakage Section Installation and Repair Section
Four Senior Engineers will be in-charge of the four main sections and they will delegate and monitor the tasks to their team consisting of Engineers, Technicians and Field Assistants. The NRW Senior Manager and Senior Engineers of each section will be provided with office assistants to facilitate in documentation and record filing. For the Establishment and Active Leakage Section, each team under their respective engineers will consist of 1 Technician and 2 Field Assistant. It is recommended that all the members of this proposed department will have relevant qualification related to engineering and relevant experiences related to water supply engineering or non-revenue water related projects.
29
Below is the summary of proposed staffing to undertake Holistic NRW reduction program based on the 5-year implementation of Non Revenue Water (NRW) Management Strategy for the city:
Jabatan NRW Senior Manager Senior Engineer Engineer Quantity Surveyor Technician Field Assistant Personal Assistant Clerk Total
Jumlah 1 4 9 1 35 50 1 4 105
30
Ranhill Water Services Sdn. Bhd
Proposed Organizational Chart for Surabaya NRW Reduction

President Director
Distribution Director
NRW Senior Manager
Assistant
DATA ANALYSIS SECTION
ESTABLISHMENT SECTION
ACTIVE LEAKAGE CONTROL SECTION
INSTALLATION & REPAIR SECTION
Senior Engineer
Senior Engineer
Senior Engineer
Senior Engineer
Assistant
Assistant
Assistant
Assistant
PLANNING
DATA ANALYSIS & CONTROL ROOM
INSTALLATION
REPAIR
QUANTITY SURVEY
Engineer
Engineer
Engineer
Engineer
Engineer
Engineer
Engineer
Engineer
Engineer
Quantity Surveyor
Technician
Establishment Team 1
Leakage Team 1
Leakage Team 6
Leakage Team 11
Technician
Technician
Technician
Leakage Team 2
Leakage Team 7
Leakage Team 12
Technician
Technician
Technician
Leakage Team 3
Leakage Team 8
Leakage Team 13
Technician
Leakage Team 4
Leakage Team 9
Leakage Team 14
Technician
Leakage Team 5
Leakage Team 10
Leakage Team 15
Technician
31
Comparison with the Organizational Structure

The diagram below shows Organizational Structure:
Current
the
PDAM
Surabaya
Surabaya
NRW
NRW
current
PDAM
Compared with the proposed Organizational Chart for the NRW Reduction Department, it can be seen that the current PDAM Surabaya NRW Organizational Structure lacks the details in terms of assignment of dedicated teams to conduct holistic NRW reduction. The proposed organizational structure features dedicated teams that will focus on major scope of works under NRW reduction program.
Establishment of PDAM Surabaya Active Leakage Control Section

At the four main sections of NRW department, emphasis will be given to the establishment of Active Leakage Control Section as the significance of this section will trigger more NRW reduction activities and the NRW level as well.
32
The Leakage Control Section that will undertake Active Leakage Control operations. Passive leakage control is where a water company reacts only to reported leaks and bursts. This type of leakage control results in only visible leaks being repaired. Active leakage control is where the water company sets up a control team that actively looks for leaks. This can be done but also includes the use of leak noise locating equipment, correlators and leak noise loggers, and detection techniques, step testing. leakage visually, such as such as
Active leakage control results in more underground leaks being found and will therefore significantly reduce the level of NRW. All leakage control staff will undergo regular training in equipment operation and detection techniques. It is essential that the leakage control staff have adequate numbers of this equipment and the necessary training and experience to operate the equipment efficiently and successfully. Therefore appropriate levels of materials, equipment and training must be provided to enable the leakage control teams to carry out their duties.
Technical training programs will be conducted for all relevant staff. To ensure all PDAM Surabaya staff will be able to locate NRW problems as efficiently as possible a series of technical training programs need to be conducted. This will ensure that the leakage control teams will have adequate support within PDAM Surabaya organization. Training and skills transfer within PDAM Surabaya can be achieved through: 1. Workshops and Customized Technical Training Sessions 2. Technology Transfer from Equipment Providers/Suppliers and Third Party Technology Service Providers 3. Hands-on Exercises and Field Training
Incentives for Staff Based on NRW Reduction Made

The NRW awareness sessions will impart to every personnel his or her roles and responsibilities toward achieving the reduction in NRW level. The active participation to contribute towards NRW reduction can be further achieved by giving incentives based on NRW reduction made. This method can be in-form of bonus or rewards to the employees especially
33
those directly involved in NRW reduction activities whether technical or non-technical staff such that their efforts would be recognized and give encouragement towards further reducing NRW.
Retaining of Experienced Staff

Human resource is an important component to enable NRW management and reduction strategies to be successful. Experienced NRW managers, engineers and ground staff are difficult to find nowadays because there are only few specialists on this field and NRW reduction projects are not as many as Construction or building projects. Effort must be made to retain staff with NRW management and reduction experience so that they will not switch careers and further hone their skills to make them specialist. Knowledge management and sharing initiatives within the PDAM Surabaya organization must be established. Through Knowledge management and sharing initiatives, experienced NRW staff will become specialist and the staff with limited knowledge of NRW will gain more knowledge.
1.15 Customer Charter

To enhance the policy on NRW Management Strategy, it is recommended for PDAM Surabaya to incorporate the existing customer charter with the following statements below: PDAM Surabaya will strive to achieve 30% of NRW Level by the end of 2015 and will further reduce it for the next succeeding years. PDAM Surabaya will continue to provide safe and adequate of water supply to the people of Surabaya city and will strive to reduce and its Non Revenue Water (NRW) to the acceptable level of 30% or lower through the implementation of the NRW Management Strategic Plan. NRW Awareness Programs Will Be Conducted To All PDAM Surabaya Staff To ensure all staff has an adequate understanding of the components of NRW and how & why it is important to reduce, NRW awareness programs will be undertaken for all staff. NRW Public Awareness Programs To Be Implemented PDAM has over 405,700 customers and utilizing these customers will greatly increase PDAMs ability to locate problems faster.
34
For this to happen effectively PDAM must develop two areas, educating the public on NRW and making the reporting of NRW problems an easy an inexpensive action. PDAM will develop a customer awareness program aimed at promoting NRW and how to reduce it. In addition, existing Call and SMS centre will be further enhanced to provide more effective response to the customer needs. All Consumers of PDAM Surabaya Will Be Accurately Metered and Billed Accordingly. All customers supplied by PDAM Surabaya will be accurately metered and billed accordingly. At present PDAM has some 405,700 registered customers, all of whom are metered, with these meters being read and the customers subsequently billed on a monthly basis. Any meters found to be faulty or non-functional will be replaced with a new meter immediately. All Operational Consumption Will Be Accounted and Reported Any unmetered consumption of water, whether billed or not, will be accounted and reported, for use in the calculation of NRW.
35
2 Financial Option
2.1 Estimated Cost
The proposed implementation of the strategies to reduce NRW in Surabaya city is expected to be implemented over five (5) years in which the present NRW level of 36.32% to be brought down to 30%. The estimated cost of activities under the Proposed Implementation Strategy for NRW Management in Surabaya City is summarized below:
No 1 2
Activities NRW Awareness Programme Production Meter Accuracy Replacement of Existing insertion probe meters with full bore fix flange electromagnetic meter Customer Meter Reservoir Overflow Control Inter-Zone Metering DMA Establishment: DMA Establishment DMA Infrastructure Setup Leakage Reduction Activities: Active Leakage Control Service Connection Leak Repair Secondary pipe line repair Pressure Management Establishment of Control Room Call Center Improvement Asset Maintenance Pipe Replacement Programme Total
Cost (Million USD) 0.05 0.20
3 4 5 6
2.00 0.05 0.60 2.80 4.00 4.50 11.50 10.00 0.50 0.05 0.05 1.70 12.00 50.00
8 9 10 11 12
The estimated total cost of the project for 5 years implementation is 50 million US$. The Time and Human Resource estimates needed to implement the project is shown on the following tabulation:
36
Time and Human Resource Estimates

YEAR 1 2012 Jul-12 Aug-12 0.008 0.008 Sep-12 0.008 0.008 Oct-12 0.008 0.008 Nov-12 0.008 0.008 Dec-12 0.008 0.008 0.093 0.057 0.083 0.093 0.057 0.083 0.217 0.189 0.033 0.033 0.033 0.033 0.033 0.033 0.167 0.100 0.100 0.100 0.100 0.100 0.100 0.133 0.017 0.008 0.008 0.222 0.150 0.150 0.150 0.150 0.150 0.150 0.789 0.133 0.017 0.008 0.008 0.222 1.195 0.133 0.017 0.008 0.008 0.222 1.195 0.133 0.017 0.008 0.008 0.222 1.195 0.133 0.017 0.008 0.008 0.222 1.195 0.133 0.017 0.008 0.008 0.222 1.195 0.222 1.178 0.222 1.178 0.222 1.178 0.222 1.178 0.222 1.178 0.222 1.178 0.222 1.011 0.222 1.011 0.222 1.011 0.222 1.011 0.222 1.011 0.222 1.011 0.222 1.011 0.222 1.011 0.222 1.011 0.222 1.011 0.222 1.011 0.222 1.011 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.167 0.167 0.167 0.167 0.167 0.167 0.167 0.167 0.167 0.167 0.167 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 Jan-13 Feb-13 Mar-13 Apr-13 May-13 2013 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 YEAR 2 2014 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 YEAR 3
Code
Strategy
Scope
Infrastructure/ Asset / Software
COST No. of Staff (Million US Required $)
opex opex opex opex opex
NRW Awareness Programs Reservoir Overflow Control DMA Establishment Asset Maintenance: Active Leakage Control
4 Training Sessions Installation on 5 Reservoirs Establishment of 326 DMAs Periodical assets servicing Entry of 326 DMAs Repair 30% of service connection Repair5 leaks per kilometer Install and verifiy Verify and replace Establish 6 zone and install meters Installation Pressure survey and installation Setup Upgrade Replacement of total length
N.A Remote monitoring Sustem N.A Asset database N.A N.A N.A 10 Production Meter 5% of service connection 61 Inter-Zone Meter DMA meter, logger, valve, cabinet 50 Pressuring Reducing Valve Server, computer, network Server, computer, network, multimedia 205 km new pipeline
4 1 34 10 49 4 2 3 5 6 5 3 5 2 15 148
0.05 0.05 2.80 1.70 4.50 11.50 10.00 0.20 2.00 0.60 4.00 0.50 0.05 0.05 12.00 50.000
0.008 0.008
repair work Service connection Leak repair repair work Secondary pipe leak repair capex capex capex capex capex capex capex capex
Production Meter Accuracy: Customer Meter Inter-Zone Metering DMA Infrastructure Setup Pressure Management: Establishment of Control Room Call Center Improvement: Pipe Replacement Programme Sub- total
YEAR 3 Code Strategy Scope Infrastructure/ Asset / Software Jan-15 Feb-15 Mar-15 Apr-15 May-15 2015 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15
YEAR 4 2016 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16
YEAR 5 2017 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17
opex opex opex opex opex
NRW Awareness Programs Reservoir Overflow Control DMA Establishment Asset Maintenance: Active Leakage Control
4 Training Sessions Installation on 5 Reservoirs Establishment of 326 DMAs Periodical assets servicing Entry of 326 DMAs Repair 30% of service connection Repair5 leaks per kilometer Install and verifiy Verify and replace Establish 6 zone and install meters Installation
N.A Remote monitoring Sustem N.A Asset database N.A N.A N.A 10 Production Meter 5% of service connection 61 Inter-Zone Meter 0.13333333 0.01666667 0.13 0.02 0.133 0.017 0.133 0.017 0.133 0.017 0.133 0.017 0.09333333 0.05666667 0.08333333 0.21698113 0.18867925 0.09 0.06 0.08 0.22 0.19 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.093 0.057 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189 0.083 0.217 0.189
repair work Service connection Leak repair repair work Secondary pipe leak repair capex capex capex capex capex capex capex capex
Production Meter Accuracy: Customer Meter Inter-Zone Metering DMA Infrastructure Setup Pressure Management: Establishment of Control Room Call Center Improvement: Pipe Replacement Programme Sub- total
DMA meter, logger, valve, cabinet 50 Pressuring Reducing Pressure survey and installation Valve Setup Upgrade Replacement of total length Server, computer, network Server, computer, network, multimedia 205 km new pipeline
0.22222222 1
0.22 1.011
0.222 1.011
0.222 1.011
0.222 1.011
0.222 1.011
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
0.222 0.711
37
2.2 Options for Implementing the Proposed Strategy for NRW Management
This section provides the options for PDAM Surabaya to implement the proposed strategies to further reduce NRW levels:
OPTION 1 : In-House Implementation and Funded by PDAM

All activities under the proposed strategies to undertake NRW management will be done In-House and will be financed by PDAM Surabayas internal funds. In this option, PDAM will have to hire and maintain regular staff until their retirement. For PDAM Surabaya to undertake holistic NRW Reduction in-house, a total number of 107 staff consists of managers, engineers, technicians, clerks, assistants and laborers will be required. PDAM Surabaya also needs to take into consideration the following items if this option would be preferred: Cost of In-house activities and staffing (estimated number of staff = 105) Overhead costs of maintaining staff (salary, fringe benefits, social security, medical benefits, transport, fuel, overtime, trainings and office/administration cost) Acquisition of equipment, tools and transportation to mobilize teams Maintenance of equipment, tools and transportation Ensuring the productivity of all staff to be maintained all the time Staff Movement If some members of the staff are to be transferred to another department, it will create an impact on the sustainability of NRW reduction strategy The cost of implementation will be taken from PDAM Surabayas financial reserves and it will be a cost-burden to make expenses within the implementation period.
OPTION 2 : Outsourced Implementation and Funded by PDAM

All activities under the proposed strategies to undertake NRW management will be outsourced to a NRW Specialist Contractor and will be financed by PDAMs internal funds. The cost of implementation 50 Million US$ will also be taken from PDAM Surabayas financial reserves and will also be a cost-burden to make
expenses within the implementation period. However, the risk of failure or chances of success will be transferred to the NRW Specialist Contractor and PDAM is not obliged to employ additional staff or purchase new equipment.
OPTION 3 : Outsourced Performance Based NRW Reduction;

Project Funded through Government/Lending Institution Based on Saving Made
All activities under the proposed strategies to undertake NRW management will be outsourced to a NRW Reduction Specialist Contractor. Project will be funded through a Government/Lending Institution Loan. PDAM Surabaya will apply and secure the loan to finance the implementation of the project. Will not be a cost-burden to PDAM Surabaya because the loan can be repaid over a longer period in which once the implementation is completed it is expected that new revenue can be generated from the water being saved and eventually sold to customers. Payment will be made for CAPEX; payment for reduction only is made based on saving for the whole contract. Performance Based NRW Reduction Contract approach is increasingly being seen internationally as the most reliable means of delivering significant reductions in NRW. The World Bank and other donors have already become interested in this approach (a World Bank funded PBC is currently in progress in Ho Chi Minh City) and it is anticipated that the market for Performance Based NRW Reduction Contracts will expand over the next few years due to many benefits of using this approach: A specialist NRW reduction contractor will provide the specialist technical and managerial know-how required to successfully deliver an NRW reduction project. The contractor will select the most appropriate and effective new technology for the particular operating conditions within the utility and has the know-how to use it efficiently. At the end of the contract, the technology installed and used during the contract will be handed over to the utility, together with the infrastructure created during the course of the contract such as district meter areas (DMAs), pressure zones, telemetry etc. The contractor will also be incentivized to utilize creative solutions in the design and implementation of the project to deliver the desired NRW reduction performance and sustain the NRW reduction achieved for the life of the contract. The contractor is also able to align staff incentives with the performance objectives of the contract and has the
39
labor flexibility to employee staff when they are most effective (e.g. night leak detection crews).
OPTION 4 : Outsourced Performance Based NRW Reduction;

Project Funded through Government/Lending Institution Performance Based NRW Reduction; Penalty/Bonus
All activities under the proposed strategies to undertake NRW management will also be outsourced to a NRW Reduction Specialist Contractor and the project will be funded through Government/Lending Institution Loan. PDAM Surabaya will also apply and secure the loan to finance the implementation of the project and will pay for everything. Bonus payment is for reduction more than target per year achieved, penalty if target not achieved.
Cost Comparison Between In-house Outsourced Contract
Implementation and
For all the 4 options, costs of CAPEX and Repair works have to be borne by PDAM Surabaya either implementing it in-house or outsourcing. The only comparison which can be applied is through the difference of expenditure in OPEX. Description Opex/Outsourced Implementation Cost In-House Implementation Cost Cost (Million USD) 9.50 7.00
40
Advantages and Disadvantages

Below is the summary of advantages and disadvantages of the 4 options:
Options
Advantages
Disadvantages
High overhead cost in the long term Cost-burden to make expenses within the implementation period Cost-burden to make expenses within the implementation period Outsourcing cost requires higher expenditure during implementation stage than inhouse implementation . Potential higher cost due to interest payments on loan
Option 1: In-House Implementation and Funded by PDAM
Development of In-house capability and potential to conduct NRW reduction projects to other water utility companies
Option 2: Outsourced Implementation and Funded by PDAM
The risk of failure or chances of success is transferred to the NRW Specialist Contractor Cost-effective in terms of overhead, staff cost, logistics and equipment The risk of failure or chances of success is transferred to the NRW Specialist Contractor The specialist NRW reduction contractor will provide the specialist technical and managerial know-how required to successfully deliver an NRW reduction project because of there will be no income if no saving is made Will not be a cost-burden to PDAM Surabaya because the loan can be repaid in a longer period once the implementation is completed when it is expected that new revenue can be generated from the water being saved and eventually sold to customers
Option 3: Outsourced Performance Based NRW Reduction; Project Funded thru Government/Lending Institution Based on Saving Made
41
Options
Advantages
Disadvantages
Option 4: Outsourced Performance Based NRW Reduction; Project Funded thru Government/Lending Institution Performance Based NRW Reduction; Penalty/Bonus
The risk of failure or chances of success is transferred to the NRW Specialist Contractor The specialist NRW reduction contractor will provide the specialist technical and managerial know-how required to successfully deliver an NRW reduction project because of the penalty that will be incurred if reduction targets are not achieved Will not be a cost-burden to PDAM Surabaya because the loan can be repaid in a longer period once the implementation is completed when it is expected that new revenue can be generated from the water being saved and eventually sold to customers Opportunity to earn extra revenue if the specialist NRW reduction contractor did not achieve the target reduction due to payment of penalty
Outsourcing cost requires higher expenditure during implementation stage than inhouse implementation . Potential higher cost due to interest payments on loan
Risk Associated for Each Options

Below is the summary of risk associated for each of the 4 options:
Option 1:
Insufficiency of funds to implement the strategies and therefore will lead to unsuccessful implementation Potential burst in the overhead costs due to maintenance of large number of manpower and equipment Possibility of experienced NRW staff moving to other companies halfway during implementation of the NRW Management Strategy. Other Engineering firms or Water companies offer lucrative salary packages for Engineers with sufficient NRW reduction experience especially overseas. For the water company, this will mean loss of human resource and cost invested for the staff to be experienced in NRW reduction and management.
Option 2:
Contractor performance will be limited by the available funds and therefore all the proposed strategies to achieve Holistic NRW Reduction and network management program will not be fully implemented Insufficiency of funds to implement the strategies and therefore will lead to unsuccessful implementation. If the NRW specialist contractor will not receive his due payment, the project might be terminated and therefore unsuccessful. Non-performance of the NRW specialist contractor due to subsequent delays in logistics and delays in processing of claims Possible technology transfer to Surabaya may not be realized and therefore no continuity in implementing the NRW Management Strategy.
Option 3:
The NRW specialist contractor commissioned may not achieve the set NRW reduction targets. If no reduction in the NRW level, there will be no volume of water saved and eventually translates to no-revenue. If no revenue is generated due to failure of the NRW specialist contractor to reduce NRW level, there will be no revenue to repay the loan to finance the project and therefore will become a financial liability to PDAM Surabaya (bad loans). Possible termination of the NRW specialist contractor half-way during the implementation of the project. The project will be suspended and therefore the cost incurred by both parties will never be recovered. Possible technology transfer to Surabaya water company may not be realized and therefore no continuity in implementing the NRW Management Strategy.
Option 4:
The NRW specialist contractor commissioned may not achieve the set NRW reduction targets. If no reduction in the NRW level, there will be no volume of water saved and eventually translates to no-revenue. If no revenue is generated due to failure of the NRW specialist contractor to reduce NRW level, there will be no money to repay the loan to finance the project and therefore will become a financial liability to PDAM Surabaya (bad loans). The NRW specialist contractor will still be paid for his services even though the set NRW reduction targets were not achieved. PDAM will
43
not earn enough revenue to repay the loans and the cost recovery will take longer. If the performance of the NRW specialist contractor will not improve, there is still the possibility of contract termination half-way during the implementation of the project. The project will be suspended and therefore the cost incurred by both parties will never be recovered. Possible technology transfer to Surabaya water company may not be realized and therefore no continuity in implementing the NRW Management Strategy. However, the specialist contractor is also liable to pay the penalty for non-achievement of NRW reduction target.
44
3 Cost Benefit Analysis

Below is the tabulation of cost-benefit analysis for 5 year implementation of proposed strategies to further reduce NRW levels from 36.32% down to 30%:
Table 3.1 Cost-Benefit Analysis Tabulation

NRW End Of Yr1 Water Supplied (Million 3 m) Water Billed For Consumption (Million 3 m) NRW Level (Present) Water Billed For Consumption (Million 3 m) NRW % Reduction Target Additional Water (Million 3 m) (Projected) Water Billed For Consumption (Million 3 m) NRW Level Every Year NRW Reduction Every Year Percentage NRW Reduced Additional Water Sold Additional Revenue Water Billed For Consumption (Million 3 m) Water Tariff (average) 3 USD/m Additioanal Revenue Per Year (Million USD) 1.306 4.440 8.411 12.459 16.517 261.214 166.332 End Of Yr2 261.214 166.332 End Of Yr3 261.214 166.332 End Of Yr4 261.214 166.332 End Of Yr5 261.214 166.332
Baseline (2009 Data)
36.32% 166.332
36.32% 166.332
36.32% 166.332
36.32% 166.332
36.32% 16.332
1.306 167.638
4.440 170.772
8.411 174.743
12.459 178.791
16.517 182.849
35.82% 0.50% 0.50%
34.62% 1.20% 1.70%
33.10% 1.52% 3.22%
31.55% 1.55% 4.77%
30.00% 1.55% 6.32%
0.302 0.40
0.302 1.34
0.302 2.54
0.302 3.77
0.302 5.00
45
Table 3.1 shows the potential NRW reduction and revenue that can be derived using the baseline NRW level of 36.32% (2009) and expected reduction to various levels. It also shows that by reducing NRW levels, there will be significant volume of water saved and will become additional revenue. 1% NRW reduction is equivalent to saving of 2.612 million cubic meters (million m3) per year. This water saved will eventually be sold to customers of PDAM Surabaya which will translate into additional revenue. From the above tabulation shows that at the end of year 1, the expected NRW level is 35.82% with a reduction of 0.50% or 1.306 million cubic meter water saved. From this saving, PDAM could generate additional revenue amounting to 0.40 million US$ based on average water tariff of 0.30 US$ per cubic meter. At the end of 5th year, the expected NRW level will be 30% with a total reduction of 6.32%. In terms of water volume saved this will be equivalent to 16.517 million cubic meters and will generate additional revenue amounting to 5 million US$ by supplying this water to new customers. After the project implementation PDAM Surabaya shall generate a potential revenue of an average 5.0 million US$ by maintaining the NRW levels at 30%.
46
The tabulation below show the projected cash flow of the implementation of proposed strategies to reduce NRW levels:
Table 3.2 Project Implementation Cash Flow

Implementation Years Duration 1 2 3 4 5 Post-Implementation Years 1 2 8 9 10
2012/ 2013/ 2014/ 2015/ 2016/ 2017/ 2018/ 2024/ 2025/ 2026/ 2013 2014 2015 2016 2017 2018 2019 2025 2026 2027 Revenue Per Year Accumulated Revenue at 5th Year Accumulated Revenue at Payback Period (US$) Maintenance Cost After Implementation Inclusive of: Active Leakage Control, Service connection Leak repair and Secondary pipe leak repair in (US$) Cost per Year (US$) Total Cost for 5 Year Implementation (US$) Accumulated Cost of Implementation at Payback Period (US$) Surplus/(Deficit) Accumulated Surplus/(Deficit) Financing/Repayment 0.40 1.34 2.54 3.77 5.00 13.05 5.50 5.50 5.50 5.50 5.50
57.01
0.10 0.26 0.23
0.10 0.26 0.23
0.10 0.26 0.23
0.10 0.26 0.23
0.10 0.26 0.23
0.90
13.83 12.13 18.87
4.27 50.00
0.59
0.59
0.59
0.59
0.59
54.69 -0.50 -12.49 -9.59 -15.10 0.73 4.91 4.91 4.91 -0.50 -12.99 -22.59 -37.68 -36.96 -32.05 -27.14 2.32 38.0 4.91 4.91 7.22 12.13
The total cost of the project for 5 years implementation would be 50 million US$. If the NRW level is to be maintained at 30% throughout the succeeding years after the implementation, PDAM Surabaya needs to spend additional cost of 0.59 million US$ annually. The tabulation shows that the accumulated revenue during the implementation period is equivalent to 13.05 million US$. On the last year of implementation, PDAM Surabaya could generate new revenue of 5 million US$ per year.
47
After implementation, it is expected that a potential 5.5 million US$ per year could be generated assuming the PDAM Surabaya will increase their tariff by 10% at the start of the 6th year. This increase in tariff can be justified through capital expenditures and service improvement projects brought about by the implementation of non-revenue water reduction management strategies. Referring to the above tabulation, it shows that PDAM Surabaya could recover the investment of the project after 8 years upon completion of the 5-year project implementation. At the end of 8th year, PDAM Surabaya will have an accumulated expenditure amounting 4.69 million US$ however, the expected accumulated revenue on that same period would be 7.01 million US$. This would mean that PDAM Surabaya not only reached the break-even point but will start gaining profit from the project with initial amount of 2.32 million US$. This accumulated gained profit will steadily increase in the next successive years as the NRW level is maintained at 30%.
48
Below are the different scenarios for the implementation of the project: Scenario 1: Project Implemented and Tariff Increased
Implementation Years Duration Post-Implementation Years
10
2012 / 2013 / 2014 / 2015 / 2016 / 2017 / 2018 / 2019 / 2020 / 2021 / 2022 / 2023 / 2024 / 2025 / 2026 / 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Revenue Per Year Accumulated Revenue at 5th Year Accumulated Revenue at Payback Period (US$) Maintenance Cost After Implementation Inclusive of: Active Leakage Control,Service connection Leak repair and Secondary pipe leak repair in (US$) Cost per Year (US$) Total Cost for 5 Year Implementation (US$) Accumulated Cost of Implementation at Payback Period (US$) Surplus/(Deficit) Accumulated Surplus/(Deficit) Financing/Repayment -0.50 -0.50 38.00 -12.49 -12.99 -9.59 -22.59 -15.10 -37.68 0.73 -36.96 4.91 -32.05 4.91 -27.14 4.91 -22.23 4.91 -17.32 4.91 -12.41 4.91 -7.50 4.91 -2.59 0.90 13.83 12.13 18.87 4.27 50.00 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.40 1.34 2.54 3.77 5.00 13.05 57.01 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50
54.69
4.91 2.32 Payback
4.91 7.22
4.91 12.13
If the project will start as early as year 2012 and will be completed by year 2017 at the same time there would be increase in water tariff on the following year, the payback period would be 8 years after implementation which is by year 2025. The sooner the project is implemented, the more revenue can be expected from volume of water saved over time.
49
Scenario 2: Project Implemented and No Tariff Increased

Implementation Years Duration Post-Implementation Years
10
2012 / 2013 / 2014 / 2013 2014 2015 Revenue Per Year Accumulated Revenue at 5th Year Accumulated Revenue at Payback Period (US$) Maintenance Cost After Implementation Inclusive of: Active Leakage Control,Service connection Leak repair and Secondary pipe leak repair in (US$) Cost per Year (US$) Total Cost for 5 Year Implementation (US$) Accumulated Cost of Implementation at Payback Period (US$) Surplus/(Deficit) Accumulated Surplus/(Deficit) Financing/Repayment -0.50 -0.50 38.00 -12.49 -12.99 -9.59 -22.59 0.90 13.83 12.13 0.40 1.34 2.54
2015 / 2016 / 2017 / 2018 / 2019 / 2020 / 2021 / 2016 2017 2018 2019 2020 2021 2022 3.77 5.00 13.05 5.00 5.00 5.00 5.00 5.00
2022 / 2023 / 2024 / 2025 / 2026 / 2023 2024 2025 2026 2027 5.00 5.00 5.00 5.00 5.00
53.05 0.10 0.26 0.23 18.87 4.27 50.00 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59
54.69
-15.10 -37.68
0.73 -36.96
4.41 -32.54
4.41 -28.13
4.41 -23.72
4.41 -19.30
4.41 -14.89
4.41 -10.48
4.41 -6.06
4.41 -1.65
4.41 2.76 Payback
4.41 7.18
If the project will start as early as year 2012 and will be completed by year 2017. However, for this scenario there would be no increase in water tariff after the implementation. The payback period would be 9 years after implementation which is on year 2026.
50
Scenario 3: Project Deferred for 5 years and No Tariff Increase After Implementaion
Implementation Defered Duration Implementation Years
1
2012 / 2013
2
2013 / 2014
3
2019 / 2020 2.54
4
2020 / 2021 3.77
8
2029 / 2030 5.00
9
2030 / 2031 5.00
10
2031 / 2032 5.00
2014 / 2015 / 2016 / 2017 / 2018 / 2019 2015 2016 2017 2018 0.40 0.00 1.34
2021 / 2022 / 2022 2023 5.00 13.05 5.00
Revenue Per Year Accumulated Revenue at 5th Year Accumulated Revenue at Payback Period (US$) Maintenance Cost After Implementation Inclusive of: Active Leakage Control,Service connection Leak repair and Secondary pipe leak repair in (US$) Cost per Year (US$) Total Cost for 5 Year Implementation (US$) Accumulated Cost of Implementation at Payback Period (US$) Surplus/(Deficit) Accumulated Surplus/(Deficit) Financing/Repayment 0.00 0.00 38.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
53.05 0.10 0.26 0.23 0.90 13.83 12.13 18.87 4.27 50.00 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59 0.10 0.26 0.23 0.59
54.69
-0.50 -0.50
-12.49 -12.99
-9.59 -22.59
-15.10 -37.68
0.73 -36.96
4.41 -32.54
4.41 -1.65
4.41 2.76 Pa yba ck
4.41 7.18
If the project will be deferred for another 5 years and will start only on year 2017, the expected completion would be 2022. For this scenario there would be no increase in water tariff after the implementation. The payback period would be 9 years after implementation which is on year 2031.
51
Scenario 4: Project Deferred for 5 years with Tariff Increase After Implementation
Implementation Defered Duration Implementation Years
8
2029 / 2030 5.50
9
2030 / 2031 5.50
2012 / 2013 / 2014 / 2013 2014 2015 Revenue Per Year Accumulated Revenue at 5th Year Accumulated Revenue at Payback Period (US$) Maintenance Cost After Implementation Inclusive of: Active Leakage Control,Service connection Leak repair and Secondary pipe leak repair in (US$) Cost per Year (US$) Total Cost for 5 Year Implementation (US$) Accumulated Cost of Implementation at Payback Period (US$) Surplus/(Deficit) Accumulated Surplus/(Deficit) Financing/Repayment 0.00 0.00 38.00 0.00 0.00 0.00 0.00
2015 / 2016 / 2017 / 2018 / 2019 / 2016 2017 2018 2019 2020 0.40 0.00 1.34 2.54
2020 / 2021 / 2022 / 2021 2022 2023 3.77 5.00 13.05 5.50
0.10 0.26 0.23 0.90 0.00 13.83 12.13 18.87 4.27 50.00 0.59
0.10 0.26 0.23 0.59
0.10 0.26 0.23 0.59
0.00 0.00
0.00 0.00
-0.50 -0.50
-12.49 -12.99
-9.59 -22.59
-15.10 -37.68
0.73 -36.96
4.91 -32.05
4.91 2.32 Pa yba ck
4.91 7.22
If the project will be deferred for another 5 years and will start only on year 2017, the expected completion would be 2022. For this scenario there would be an increase in water tariff after the implementation. The payback period would be 8 years after implementation which is on year 2030. Financing the Project Implementation
A loan from Government/Lending Institution will be required to finance the project with an estimated amount of 38.0 million US$ based on the maximum budget deficit by PDAM on the 4th year of implementation. Loan drawdown will be depending on the requirement of the working capital which can be disbursed on quarterly/yearly basis. Repayment of loan principal and interest will be as per the banks schedule in which repayment can be approved for certain period of time.
52
4 Conclusion
The following are the conclusions derived from this report:
Fifteen (15) strategies were formulated and will be recommended to PDAM Surabaya to undertake network management and holistic NRW management program. Of the fifteen (15) strategies that were formulated, it is recommended that strategies 1.2 Production Metering and 1.5 Inter-Zone Metering are implemented first to determine the NRW levels of the high level water supply system of Surabaya city which eventually will lead to the calculation of over-all water balance of the entire water supply system. Zones with high losses will eventually be identified and/or prioritized for DMA establishment and NRW reduction activities. The cost of implementing the strategies to reduce NRW from the existing 36.32% level down to 30% in Surabaya city is estimated at 50 million US$. The project implementation is for 5 years Four (4) options were available for PDAM Surabaya to implement the project. Of the 4 options available, Option 4 is recommended and has more advantages compared to the other 3 options because the risks of failure and success is shared by client (PDAM Surabaya) and the appointed NRW Specialist Contractor. Performance- based NRW reduction penalty/bonus type of project will provide more motivation to both parties due to rewards and potential revenue it can generate as more water is being saved through these NRW reduction activities. The Contractor will be rewarded for bonus and thus will provide best technical and innovative solutions to deliver more than the targeted NRW reduction levels. Below are tabulated lists of some water companies we feel that will be capable in implementing NRW Reduction Projects in Indonesia, Southeast Asian Region (ASEAN) and other countries outside Asian Region.
53
Local/International Private Sector Companies Involved in NRW Reduction Projects That Operated in Indonesia:
Company Lyonnaise des Eaux Acquatico Generale des Eaux Cascal PT Pran Indo Permata Abadi (PT PIPA) RWE/Thames Water
Parent company (country) SE (France) Acquatico (Indonesia) VE (France) Sembcorp (Singapore) PT Pran Indo Permata Abadi (PT PIPA Indonesia) RWE/Thames Water (Indonesia)
Some International Water Companies Involved NRW Reduction Projects Operating Within the ASEAN Region:
Company Ranhill Water Services Sdn. Bhd. Salcon Berhad Jalur Cahaya Sdn.Bhd Hatimuda Sdn.Bhd PBA Holdings Sdn Bhd Danwater Malaysia Sdn Bhd/Danwater Thailand Public Utilities Board of Singapore MWH Global, Inc. (Asia-Pacific) Biwater International Ltd Thames Water International Manila Water Co., Inc. Miya Philippines
Parent company (country) Ranhill Berhad (Malaysia) Salcon Berhad (Malaysia) Jalur Cahaya Sdn.Bhd (Malaysia) Hatimuda Sdn.Bhd (Malaysia) PBA Holdings Bhd (Malaysia) Danwater (Denmark) Public Utilities Board (Republic of Singapore) MWH Global, Inc. USA Biwater Holdings Ltd (UK) Thames Water Utilities Limited (UK) Ayala Corporation (Philippines) Miya Group, an Arison Group (Luxembourg)
54
Other International Water Companies with NRW Reduction Experience: Company Anglian Water Services Ltd Veolia Water Jamshedpur Utilities and Services Co. Ltd. (JUSCO) Jindal Water Infrastructure SMEC Pty Ltd GHD (Asia-Pacific) Sinclair Knight Merz (SKM) Pty Ltd United Utilities Group PLC Severn Trent Services PLC Parent company (country) Anglian Water Services Ltd (UK) Veolia Water (France) Tata Group (India) Jindal Ltd (India) SMEC Pty Ltd (Australia) GHD Pty.Ltd (Australia) Sinclair Knight Merz (SKM) Pty Ltd (Australia) United Utilities Group PLC (UK) Severn Trent PLC (UK)
However, at this moment in time, it is unlikely to assess who would be the contractor (local, regional or international, JVs etc). This assessment could only be done during the call for tender to undertake network management and holistic NRW management program in which the potential contractors would be assessed based on their relative experience, qualifications, and successful implementation/completion of prevoius large-scale NRW reduction projects. Each contractor have their strengths and weaknesses that would be imminent during the tendering process. To compliment each others strengths and eliminate each others weaknesses, JVs, Consortiums or Partnerships could be formed in order to produce competitive bids and stronger entities.
PDAM Surabaya will definitely gain knowledge in the latest and applicable technology to address NRW in their water supply systems. During the implementation, training sessions and hands-on equipment/technology will be conducted to ensure that PDAM Surabaya can carry-on undertaking the NRW reduction and maintenance activities even if the project is already completed. Acquisition of latest technology transferred including managerial system, software, tools equipments and an effective NRW reduction strategy that can be replicated to other water utility companies will definitely give PDAM Surabaya gain a lead position among its local peers.
55
There will be financial gains if the NRW Reduction project will be implemented. Potential savings from reducing NRW at 45,205 m3/day with a corresponding monetary value of US$ 420,410 per month or US$ 5,000,000 per year (assuming rate of US$ 0.30 per cubic meter of water save) Payback period will be 8 years after the project completion Potential excess supply of 45,205 m3/day (16.5 Million m3 per year) which can be diverted immediately to another 44,000 new consumers comprising nearly 11 % of the current total consumers in PDAM Surabaya. Further savings to PDAM Surabaya will lead to potential deferring of the need for a new water treatment plant with a capacity of 44,000 m3, which will approximately cost more than US$ 13,365,000 (IDR 113,474,218,348.02) More revenue can be expected if the NRW level can be further reduced and potential tariff increases which will further increase PDAM Surabayas revenue. Reduced yearly operating cost in terms of repair works and other maintenance or operation cost Ability to detect and reduce illegal connections and consumption More efficient and sustainable PDAM Surabaya operation directly improves customer services Better managed pressure in the system can improve quality of supplies, and reduces pipe burst occurrences which will minimise inconvenience to the consumers and at the same time increases life span of asset Transfer of knowledge to PDAM staff.
If the project is not implemented: The NRW level of 36.32% will remain in the system and if not addressed will create more potential leaks and increase in NRW level. With the increasing demand and more losses occurring in the system, the existing production will not be able to cater the customers and therefore will lead to intermittent supply of water.
Other benefits of reducing NRW: Regular analysis of flow and pressure data in the water supply system. NRW saving translate into financial gains to PDAM Surabaya though either incurred revenue or reduced operating cost. More efficient and sustainable PDAM Surabaya operation directly improves customer services. Improved water supply and distribution system management
Improved level of services for pressure and quality & quantity of supply. Improved Billing revenue and optimized capital investment. Reduction of water losses and controlled NRW.
57

Surabaya NRW Management Final Report

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Surabaya NRW Management Final Report

Uploaded by

Copyright:

Available Formats

THE WORLD BANK

Final Report 2011 May 2011

Ranhill Water Services Sdn.

Ranhill Water Services Sdn. Bhd.

Ranhill Water Services Sdn. Bhd.

Background of the Task

Ranhill Water Services Sdn. Bhd.

1.1 NRW Awareness Programs

Ranhill Water Services Sdn. Bhd.

1.2 Production Metering

Ranhill Water Services Sdn. Bhd.

Ranhill Water Services Sdn. Bhd.

1.3 Customer Metering

Ranhill Water Services Sdn. Bhd.

Ranhill Water Services Sdn. Bhd.

Ranhill Water Services Sdn. Bhd.

Ranhill Water Services Sdn. Bhd.

Ranhill Water Services Sdn. Bhd.

1.4 Reservoir Overflow Control

Ranhill Water Services Sdn. Bhd.

1.5 Inter-Zone Metering

Zone Connection 914 62268 87887 54631 82002 102652 390354

Inlet & Outlet

Ranhill Water Services Sdn. Bhd.

1.6 DMA Establishment

1.7 Leakage Reduction Activities

1.8 Pressure Management

Ranhill Water Services Sdn. Bhd.

Propose Number of Number of Number of Inlet Outlet DMA 1 52 73 46 68 86 326 8 4 8 7 11 38 2 5 4 9 3 23

Inlet & Outlet

914 62,268 87,887 54,631 82,002 102,652 390,354

Ranhill Water Services Sdn. Bhd.

Ranhill Water Services Sdn. Bhd.

1.9 Establishment of Control Room

Ranhill Water Services Sdn. Bhd.

GSM Network Alarm Alarm

GSM Modem MultiLog SMS PC Server

Data storage Data storage

Data Analysis Data Analysis

Pressure & Flow meter

Field display, read using PDA/Notebook PC

Ranhill Water Services Sdn. Bhd.

1.10 Call Centre Improvement

Ranhill Water Services Sdn. Bhd.

Leak Repair Crew/Panel Contractors At Work

Log-in calls Logand assess situation for further action

Maintenance Units instruct Leak Repair Crew/Panel Contractors to do Work

Inform Maintenance Units once problem resolved (closed case)

Inform Call Center if the job is completed

Ranhill Water Services Sdn. Bhd.

Below shows sample photographs of Call Center and JMS Activities:

1.11 Asset Maintenance Strategic Plan

Ranhill Water Services Sdn. Bhd.

Ranhill Water Services Sdn. Bhd.

Ranhill Water Services Sdn. Bhd.

Ranhill Water Services Sdn. Bhd.

Ranhill Water Services Sdn. Bhd.

1.12 Recording of Operational Usage

Ranhill Water Services Sdn. Bhd.

Below is a sample of tabulation to account for billed/unbilled, metered/unmetered operational usage.

1.13 Pipe Replacement Programme

Ranhill Water Services Sdn. Bhd.

Ranhill Water Services Sdn. Bhd.