MSD

Source: Energy Digital

Date :18/02/2008 03:29:52

Executive Director Jeff Theerman tells Exec how MSD is driving efficiencies across its operations

Written by James Hurley and produced by Jon Ellingwood

“If people are working in a vacuum or departments are going in different directions, employees see straight through it. They know when things don’t work right.”

Jeff Theerman’s clear, employee centred vision for running the Metropolitan St.Louis Sewer District (MSD) stems from an understanding of the operation he helped build in the 23 years he’s spent there. “I helped managed a sewage treatment plant in our district for 15 years and over another four years I managed the sewage system itself.” For the last three-and-a-half, he’s been the Executive Director. “My background helps me to understand the inner workings of the organization - it has been beneficial that I’ve worked in different roles.” And with an ongoing capital improvement programme projected to cost at least $4.5 billion over the next several decades, there are plenty of inner workings to understand.

Consolidation

A fairly unusual business model, the Metropolitan St. Louis Sewer District was formed in 1954, when voters approved the ‘Plan of the District’. A public agency, MSD is a not-for-profit, non-taxable organization and is the only special district in Missouri created under a provision of the State Constitution. It began operation and maintenance activities in January 1956 in an area roughly compromised of St. Louis City and the portion of St. Louis County east of Interstate 270. In 1977, additional parts of St. Louis County were annexed to the District. Today, MSD serves all of St. Louis City and over 80 percent of St. Louis County. MSD’s responsibilities include the interception, collection and treatment of wastewater, as well as stormwater management.

“We operate the fourth largest sewer system in the US, and we’re doing an awful lot of capital improvement to our infrastructure that involves very detailed civil engineering. My engineering background gives me an understanding of what we’re doing in an area where we’re spending a lot of money,” says Theerman. The $4.5 billion projection will only increase given the ever changing environmental regulations MSD has to meet. “This is a multiple decade program, so the rules will change and we’ll have more to do.”

MSD currently operates seven treatment facilities, treating an average of 330 million gallons of sewage per day. “Over the last 50 years, we’ve consolidated 45 treatment plants into seven and ultimately we’ll have five. These are large plants that leverage technology in a big way,” explains Theerman. The District is able to keep staffing levels relatively low because it can monitor from a central location and dispatch people where alarms occur. “We’re able to operate among the largest plants in the Midwest with single people on a shift through the use of technology.”

In house

The District used to employ control system vendors to do its control development but is now moving away from that model. “We use in house staff to configure controls in the plants now so we have complete understanding of how they are functioning and we can duplicate these algorithms from plant to plant. This means an operator from one plant can find a similar control system in another.”

Theerman says the advantage of this approach is that many of the people employed to build the control systems were once operators themselves. “If the person developing a control methodology comes from the operations side, they build a system that makes sense. That’s something you can’t buy on the outside.”

While Theerman aims to replicate this ‘in-house’ approach wherever it will be of benefit to the organization, it’s inevitable that MSD has to employ a certain number of contractors. “There are always going to be things that you can’t do as efficiently and effectively as an outside contractor and you have to be aware of that. There’s often a perspective that you want to do it all in-house, or on the flipside contract it all. I don’t think either of those philosophies is the correct one,” he says. Consultants can bring a wealth of experience to a problem until they develop a solution.

On the other hand, MSD has been doing a lot of close circuit TV inspection of its sewers to determine their asset life. “We’ve been doing flow metering in our systems – those are things we’re looking to bring in house because they’re competencies we’re going to need forever. We’ve used consultants until now because we had a lot of data collection to do all at once and it didn’t make sense to staff up to that. But now it’s going to go to a sustainable level so you have to ask yourself whether it’s cheaper to do it in house.”

Updating the supply chain

As a 24/7 operation, Theerman believes something of a conservative mindset has developed at the District when it comes to supply chain management. “We’re trying to move to a more private sector orientated procurement approach,” he says. “We’ve been pretty conservative, with lots of items on the shelf because we really can’t tolerate a treatment plant shutdown. What comes from that is a conservative mindset. We’re trying to change that, be conservative where it’s required, but realise that they are a lot of inventories that can be gotten the same day with a call. It’s a move from traditional purchasing to sourcing.”

As such, MSD’s purchasing group will see a lot of changes in the next three years, as it moves towards a private sector inspired approach to sourcing with fewer vendors and some vendor controlled inventory. This lean approach to supply chain management is balanced by a public sector imperative, however.

“We won’t be totally private sector, but we are looking to adopt the best pieces of that to bring the most value to our customers. Additionally, we’re government, so there’s a strong need and desire to utilize minority and female owned businesses for procurement as well.”

Asset management

The District is responsible for operating and maintaining approximately 9,650 miles of sewers, with ages ranging from less than a year-old to 150 years-old. It has 311 miles of sewers predating 1890, and another 524 miles of sewers more than 80 years-old, so it’s hardly surprising that asset management is a major challenge for MSD.

“We’re focusing on an asset management programme that drives improvements to the sewer system based on its condition,” says Theerman. This isn’t quite as simple as it sounds. “Our worst sewers are probably not our oldest sewers. What really needs to happen is a risk assessment – we look at which sewers are the most critical, get in there and take a look at them and then adjust our maintenance and repair plan accordingly. You’re always investigating the asset condition and renewing the assets on a schedule, with the most critical assets getting the attention first. You can apply that to any infrastructure – it’s always cheaper to renew than wholesale replace. Imagine a 12ft diameter sewer underneath the city – you don’t want that collapsing because of a lack of attention. There are ways to rehabilitate sewers without taking them out of service.”

In the wastewater and water business industry, infrastructure needs will drive the bottom line for decades, Theerman believes. “Adopting the asset management approach will become a necessity because you’ve got to get ahead of the deterioration that comes with time. We’re maintaining a system for the long term. We’re learning a lot from the global partners like the UK, Europe and Australia where there’s older infrastructure – by those standards our infrastructure isn’t particularly old.”

Updating infrastructure and modernizing business practices is a theme that has relevance beyond the District’s primary assets, however. The vast majority of MSD’s customers are residential, meaning that billing is another challenge. Three-and-a-half years ago, it moved to an application service provider, Alliance Data Systems, that provides the system and handles its call centre. “That’s been a good relationship. I think moving from a billing system that was getting increasingly difficult to maintain really helped us and an improvement in revenue has come from an aggressive approach to collecting past due sewer bills.” Unlike electricity or other utilities, it’s difficult to turn off a sewer, so MSD uses collection agencies and legal means to convince people to pay. This approach relies on clean data, something that the new system has provided. “We spent a lot of time improving our data after the new billing system was installed, which ultimately allows us to improve the service we provide our customers.”