Municipal Water, Wastewater and Drainage Utilities
Stack’d was engaged to perform a Cost of Service and Rate Study for the Water, Wastewater, and Drainage Utilities of a major Canadian municipality. The main purpose was to develop rates for the 2019-2022 business cycle, as well as plan for longer term strategies.
This year-long engagement resulted in the following outcomes:
- An equitable allocation of revenue requirements between customer classes;
- Analysis of utility issues and determination of strategic objectives associated with cost of service, rates, and rate setting; and,
- Fair and defensible rates for water, wastewater, and drainage services that inform the City’s 2019-2022 business plans and budgets.
Throughout this engagement, Stack’d worked collaboratively with subject-matter-experts and various key stakeholders. Stack’d was responsible for ensuring the project was executed successfully and the final rate structure was defensible. Multiple strategic working sessions were conducted with the Steering Committee to gather input on strategic issues, confirm understanding, and review results. The final rate structure was approved by City Council.
Industrial Equipment Dealer
Our client had traditionally grown through acquisition by purchasing independent dealer groups, but had never optimized and integrated the operations of its acquired facilities. Stack’d was engaged to execute a project to rethink and optimize its branch dealer network to increase profitability without sacrificing customer service.
Our team worked with the client to review the current status and historical performance of its branches, capture its customers’ needs and wants from their equipment dealer, and identifying new and creative branch alternatives to deliver equipment and product support to their customers.
The project resulted in recommendations to the facility types (i.e. Tiers) and the optimal geographic centers that the client should operate within supported by detailed financial analysis.
A provincial entity delivering vital programs, services, and products, endeavored to create a higher quality of life for its residents and their families. More specifically, the Organization wished to review the operations of the branch responsible for document solutions and logistics in an effort to identify potential service gaps, operational efficiencies, and cost synergies.
Stack’d was engaged to perform a thorough review of two warehouses and the various services they provided. By integrating our municipal services delivery methodology and business and operating model review methodology to fit the specific needs of the branch, Stack’d identified key strengths, weaknesses, and opportunities. As a result, Stack’d identified options for a future service delivery model for the two warehouses and provided recommendations for distribution operations that would maximize operational efficiencies and reduce ongoing operating costs while maintaining client service levels.
Large Municipal Waste Management Utility
Our client wished to develop a long-term funding model for their waste and recycling services which reflected a comprehensive treatment of service costs in alignment with a new, integrated rate structure.
Stack’d was engaged to lead a year-long detailed financial review, yielding the following deliverables:
- A new funding model to meet the needs of their next 4-year business cycle;
- A detailed cost of service study;
- A new rate structure, integrated rates model, and indicative rates; and,
- An implementation plan, including both financial and operational performance measures.
A ‘to-be’ 2010-2022 funding model has been established with the client’s management team based on a comprehensive ‘as-is’ financial model review, input from leading practices, and WRS’ desired outcomes. This vision included the identification of specific sources of funds (e.g. user fees, commodity sales, tipping fees, etc.) which shall be used to pay for their corresponding services. In addition, a 10-year forward-looking cost of service study was performed and used to support the subsequent rate structure development for 2019-2022.
To ensure understanding of how costs were allocated, Stack’d worked extensively and collaboratively with internal subject-matter-experts to understand the underlying nature of the work performed. In addition, we developed and confirmed a “translation” document with the client management team for how costs within each department and activity mapped to services, functions, and cost centers. Further, we conducted several strategic working sessions with the management team to gain input on strategic issues and confirm draft solutions for several deliverables.
Public School Board
A large public School Board wished to review the operations of its Distribution Center which is responsible for offering schools the option to purchase from their suite of products and services such as classroom products, mailing, printing, and shredding, with the intention to maximize school purchasing power. The School Board wished to assess the current effectiveness of the existing service-delivery model and organizational structure, and identify any synergy opportunities with other business units within the School Board.
Stack’d was engaged to perform the review, integrating our municipal services-delivery methodology with our organization analysis and design methodology to identify the key strengths, weaknesses and opportunities for the Distribution Center, define alternative service-delivery models for consideration, and recommend short-term and long-term reporting structures.
The changes in organization design has since been incorporated into the School Board, and are now using the results to develop a more detailed supply chain analysis and design for future operations.
Industrial Equipment Dealer
Our client had poorly defined procurement processes leading to great variation and adherence to how procurement was performed. The result was tremendous pressure and inefficiency on Accounts Payable to effectively pay invoices and provide sufficient purchasing controls. Stack’d was engaged to make recommendations to increase the efficiency and maturity of the client’s processes from initial procurement to vendor payment.
The Stack'd team worked with a client team to document and review current processes and performance to identify opportunities to improve. Using learnings from best practice, and an understanding of the client’s unique operations, our team worked with the client to develop standardized processes to manage procurement through to vendor payment. Additional recommendations to evolve the procurement to pay processes were also provided.
The project resulted in recommendations for process improvements and additional initiatives to implement to reduce the cost per invoice substantially.
Provincial Utility Operator
Our team was engaged by an organization operating within the Alberta power industry that was grappling with how to better execute on its portfolio of over 200 projects across the enterprise. Each year, no matter how much effort or intent was exhibited by the executive team and staff, the organization continually failed to execute on all of its commitments.
We recommended to the client that they implement an enterprise portfolio management office (EPMO). Key elements of the implemented EPMO included: portfolio management processes to manage trade-offs between strategic priorities, programs and projects, business case development and approval guidelines, improved portfolio reporting, and guidelines on how to work with existing PMOs across the organization.
The resulting EPMO enabled the client to identify, evaluate, prioritize, allocate resources to, and report against its range of day-to-day base work, technology investments, and strategic / performance improvement projects.
Public Oil & Gas Corporation
A publicly traded integrated energy company required a review of its process to better align the management of information in its upstream business units.
Our resources designed and developed a portfolio alignment process across upstream business units for new information management, data, subscription, and application projects and acquisitions.
This enabled the client to better manage the efficiency and effectiveness of its suite of upstream information management services.
County Water & Wastewater Utility
Our client recognized that rates for their utility services had significantly increased in recent years and Council wanted to ensure rate stability going forward. In addition, although a high-level rates model was previously developed based on a “full utility basis”, the model did not allocate costs between different customer classes.
As a result, the County engaged Stack’d to perform a detailed cost of service and rate study. This included developing the following deliverables:
- A comprehensive “as-is” review to understand the unique utility systems, service levels, operational volumes and customer consumption levels, and customer classes;
- A detailed cost of service study; and,
- A new 10-year rate structure based on changes to current customer classes and desired rate-making objectives.
As a result, the client established a fit-for-purpose methodology for determining rate revenue requirements based on availability of asset financing data and sufficient funding for forward-looking infrastructure investments. A “modified utility basis” was developed and selected as the most appropriate method to calculate rate revenue requirements for the Utility. In addition, a focused rate study resulted in an updated rate structure that reflected (1); changes to existing customer classes (based on different service levels, advanced statistical analysis of customer class consumption patterns, and costs), and (2); desired rate-making objectives.
The municipality (pop. 50k+) required a review of its funding requirements for its Waste, Wastewater, Storm Water, and Waste Management Utilities for the purpose of developing Utility Fiscal Policies.
Stack’d Consulting performed a comprehensive cost structure and policy review resulting in recommendations in utility funding, financing, reserves management, rate-setting, and overall financial management. Key considerations were given to how the Utility should fund projected infrastructure replacement and growth requirements.
Council provided accolades on the quality of analysis and reporting and ultimately adopted policy recommendations as brought forward by administration.
Government Innovation Body
A provincial organization focused at technology innovation across industry, government, and educational institutions had recently adopted a new mandate and operating model.
To support this new operating model, new operating processes were required to guide how provincial technology innovation investments should be evaluated, selected, monitored, and reported on. Our consulting professionals facilitated a client team comprised of senior, cross-functional leaders in the design and development of a Corporate Portfolio Management Office (CPMO). The purpose of this CPMO was to identify, evaluate, and prioritize investments and internal projects to better track and achieve desired technology innovation outcomes.
The CPMO was designed, developed, and launched within 6 months, providing our client’s management team the basis to holistically review, evaluate, and select new proposed investments to the province’s innovation system.
A major municipality (pop. 1M+) engaged our team to lead the development of customer service standards across all departments and services.
We led a multi-year project focused at reviewing current customer service practices and developing a Corporate Customer Service Framework and Strategy. A senior, cross-organizational team was facilitated to develop a desired future-state vision, customer service standards for common customer interactions, an internal governance model to lead subsequent customer service implementation activities, internal employee learning and development initiatives, customer service performance measures, and an implementation plan. A Corporate Customer Service Framework was established as a guide which individual Business Units could subsequently use to establish customer service standards for their unique, priority services.
This project provided the municipality the basis to both communicate what desired customer service outcomes look like for the corporation and subsequently create and align customer service promises for individual municipal services with its overall vision.
Regional Utility Commission
A regional waste management commission required assistance in establishing 5-year rates for its various services. The commission was comprised of 6 individual member municipalities and supported 7 different waste management services across 4 distinct customer classes.
Our team performed a detailed cost of service study and designed a custom rates model for the waste management commission. This included projecting future desired rates given anticipated capital expansion, financing, and operating cost projections. Detailed cost structure analysis was performed to ascertain appropriate fixed vs. variable cost characteristics and allocate fully-loaded costs to each distinct service and customer class. An integrated rates model was developed to enable the customer to determine future rates given annual operational and financial updates. The model was delivered complete with full end-user documentation and support.
At the project’s conclusion, the Commission’s Board of Directors and Manager noted the quality of work as “exceptional”.