An ISO 9000 certifiable Revenue Assurance &Audit process (RA&AP)
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Transcript of An ISO 9000 certifiable Revenue Assurance &Audit process (RA&AP)
Rui ManoManager/Principal Consultant, KEMA Brazil
Denis Maciel MaiaCEO, Choice Technologies S.A.
Renato Cespedes, PhDDirector, KEMA Latin America
An ISO 9000 certifiable Revenue Assurance &Audit
process (RA&AP)
Introduction
Why RAAP (Revenue Assurance & Audit Process)? Non-technical losses (NTLs) may exceed
20% in some countries Lack of efficient NTLs processes Loss numbers are not precise
Introduction
Lack of human and financial resources to perform all necessary actions Field investigation, service orders Debt negociation, consumer disconnection Internal process auditing
Non-technical Losses - NTL
Commercial Administrative Receivables
Energy theft (illegal connections) Meter frauds, meter by-passes Meter errors & metering errors Frauds may be done by employees or third-party
service providers
NTL
Commercial
Internal process flaws and database inconsistencies Errors Incorrect tariff May not avoid internal fraud
Administrative Receivables
NTL :
Commercial
Delayed Payment Defaulter consumer
High volume & aging of receivable accounts HIGH CO$T
Administrative Receivables
NTL consequences – a vicious circle
Reduce Investment Capacity and Operational Efficiency
Reduce CAPEX
Reduce EBITDA
NTL reduce EVA NTL may increase tariffs NTL prevention is demanded by Stockholders and
Regulators
Current NTL prevention methods
New billing systems
New meters
New seals
What else ?
Why NTL keep rising? Frauds are dynamic Fraud is now a criminal activity done by professionals How far can we ever avoid fraud?
More investigation teams
Revenue assurance process requirements
Operational Resources are
Limited
Efficient process, integratedto other company’s departments
Historical data, Team knowledge Field / administrative actions
Market Requires:R, C - Reduce tariffs
SH - Increase revenue
Revenue Assurance
Process
RAAP
Process is based on ISO 9001 (PDCA )
Detect, Analyze, Correct and
Feedback/Review
RAAP
Why automate processes ?
Make better decisions based in high volume of data available in different databases
Provide reliable information to field / administrative teams and to management
Log / document / control all events Workflow
Constant improvement by tuning / optimization Feedback
Macro-function : DETECTION
Function : to develop investigation rules Transform non-structured knowledge in logical rules, formed by
logical clauses Compare several independent information sources simultaneously Rule = a combination of logical clauses and filters Examples :
Rule for reduction of consumption Rule for investigating non-regularities in installations Rule for verification of field measurements (against historial
data) Ex.: Rule A = (Clause 1) AND ((Clause 2) OR (Clause 3)) Manipulate high volumes of historical information
Macro-function : DETECTION
Macro-function : DETECTION
Functions : to develop alarms, execute investigation rules and check the alarm rules Define weight for each rule Define alarms for each rule Define priority levels Define responsible persons Send alarm via e-mail Guarantee analysis events are generated
Macro-function : ANALYSIS
Function : to identify behavior patterns for consumer contracts Find out indications of possible loss/fraud through
multiple dimensions (consumption patterns, field data, type of service order, etc)
Filter information by any dimension (geographical area, type of consumer, etc.)
Multidimensional analysis Filter hierarchical dimensions Uncover behavior patterns
Macro-function : ANALYSIS
Function : to develop and execute investigation profiles
Profile = a combination of investigation rules and filters Examples :
Profile of consumers that are susceptible of paying their debt in 90 days or a profile of defaulter above 360 days
Profile of a geographical area or a specific type of business (for example, a shopping center, a bakery, an industry)
Ex.: Profile A = (Rule 1) AND ((Rule 2) OR (Rule 3))
Macro-function : ANALYSIS
Function : to filter, sort and select Consumer Contracts Select consumer contract sorted by :
Risk level = sum of the weights for all intercepted rules
Financial relevance = financial impact calculated for the offense
Prioritize offenses / actions by fraud probability and expected value to be recovered
Macro-function : ANALYSIS
Macro-function : CORRECTION
Functions : Generate corrective actions with defined responsibles, and
calculated financial relevance Follow-up execution until finalized Follow-up schedules per actions, per responsible, per sector, per
type of action Update Consumer Contract status though corrective actions Provide information to other systems (billing, inspection..) Statistics – effectiveness of rules and corrective actions Feedback – tuning / optimization of rules / weights
Benefits of ISO 9000 certification
Guarantee the conformity with international standards
Guarantee the adequacy with other corporate processes
Guarantee to Stockholders that best practices for revenue assurance are being applied and return of investment is being maximized
RAAP is based on ISO 9000 principles – certifiable process.
Case Study
Case Study
The Cataguazes-Leopoldina System (SCL) 5 distribution companies (Energipe, Saelpa, CELB,
CENF, Cataguazes) Founded in 1905 1.8 million consumers ABRADEE Award 2002 NorthEast and SouthEast
ABRADEE – the Brazilian Association for Electric Energy Distribution Companies
Information used by RAAP in SCL
Information sources (databases) for commercial loss investigation : Substations Feeders Consumer Contracts Billing Service orders
Example of a simple rule
(Consumption:Average of last 03 months is 25% lower than at least 02 consumptions in the 12 months period before the 03-months considered period.
BIL
LIN
G
datab
ase
Example of a more sophisticated rule
(Non-regularity: Glass of meter is broken or instalation is suspect of fraud or meter with wrong connection AND NOT AND NOT Service Order : reconnection with instalation of meter, or supply suspended with meter removed, or instalation of meter, or removal of meter, or meter test, or meter verification, or field inspection, or urgent reconnection with meter instalation or meter replacement when SO date is after date of metering.)
Group: B andStatus: Connected andClass: Urban andConnection: One-phase or 2-phase or 3-phase AND
AN
D
CO
MS
UM
ER
d
atabase
SE
RV
ICE
OR
DE
RS
d
atabase
G 1
(G 3 A
ND
G4)
Example of an actual rule created by RAAP
(Consumption:Average of last 03 months is 25% lower than at least 02 consumptions in the 12 months period before the 03-months considered period OR
(Non-regularity: Glass of meter is broken or instalation is suspect of fraud or meter with wrong connection AND NOT AND NOT Service Order : reconnection with instalation of meter, or supply suspended with meter removed, or instalation of meter, or removal of meter, or meter test, or meter verification, or field inspection, or urgent reconnection with meter instalation or meter replacement when SO date is after date of metering.))
Group: B andStatus: Connected andClass: Urban andConnection: Monophase or 2-phase or 3-phase AND
AN
DO
R
CO
MS
UM
ER
d
atabase
BIL
LIN
G
datab
aseS
ER
VIC
E O
RD
ER
S
datab
ase
G 1
(G 2
(G 3 A
ND
G4))
Rule implemented by RAAP
Results in SCL
Results of RAAP in SCL : Find NTL, uncover unknown NTL Increase recovered revenue, EBITDA and EVA Reduce cost of recovery actions Creation of a Loss Fight Intelligence Dept. to
reduce NTL and keep it low Auditable result statistics to demonstrate
benefits to Management and Stockholders.
Conclusion
Benefits from incorporating RAAP with Revenue Assurance software
Compare data from several independent sources (consumer records, billing, service orders, fraud records, energy balance, GIS, real-time data, call center data, receivable accounts, social-economic information, etc)
Manipulate large volume of data (hundreds of millions records)
Transform human non-structured knowledge in structured knowledge – build a knowledge database
NTL analysts build / edit rules - human-friendly interface, no programming necessary.
Benefits from incorporating RAAP with Revenue Assurance
software Uncover fraud patterns Optimization of the investigation process Follow-up corrective actions Workflow guarantees analysis and correction events Feedback process for tuning and optimization Integration with other departments Based on ISO 9000 – subject to be certified. SOUND RESULTS – VERIFIABLE AND AUDITABLE