DraftInceptionReport-(endMay2010)-11

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Government of Sindh North Sindh Urban Services

Corporation LimitedAsian Development Bank

PROGRAM MANAGEMENT AND IMPLEMENTATION SUPPORT

SUPPORT FOR NORTH SINDH URBAN SERVICES CORPORATION

(NSUSC)SCIP 2

LOAN NO. 2499-PAK

DRAFT INCEPTION REPORT

(Incorporating the First Quarterly Progress Report)

May 2010

(J40252340)

GHK Consulting Limited FINCON Services Inc


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Government of Sindh North Sindh Urban Services

Corporation LimitedAsian Development Bank



(NSUSC)SCIP 2

LOAN NO. 2499-PAK

DRAFT INCEPTION REPORT

(Incorporating the First Quarterly Progress Report)

May 2010

(J40252340)



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Inception and First Quarterly Progress Report Table of Contents

GHK Consulting LimitedJ40252340

Page (i)

TABLE OF CONTENTS

ACRONYMS & ABBREVIATION

1.0 INTRODUCTION 1-1

1.1 Background 1-11.2 The Report Objectives 1-51.3 The Report Structure 1-5

2.0 MOBILISATION ACTIVITIES 2-1

2.1 Team Mobilisation in the Field 2-12.2 Inception Stage Visits of the Other International and National Consultants 2-12.3 Inputs from the Remaining Team Members 2-3

3.0 INITIAL FINDINGS AND OBSERVATIONS 3-1

3.1 General 3-13.2 Transition of Khairpur TMA 3-53.3 Performance and Monitoring Indicators for NSUSC 3-103.4 Information Technology and Management Information Systems 3-123.5 Geographic Information System 3-153.6 Communication, Awareness Raising and Advocacy 3-163.7 Ensuring SCIP-2 services provide the best value for money to NSUSC 3-17

4.0 FACILITIES PROVIDED BY THE CLIENT 4-1

5.0 LINKAGE WITH OTHER SCIP CONSULTANCY PACKAGES AND

TECHNICAL ASSISTANCE

5-1

5.1 Relation of Various Consultancy and TA Packages 5-1

6.0 DETAILED WORK PROGRAM 6-1

6.1 Timing of support and deliverables 6-16.2 Revised Personnel Schedule 6-10

7.0 TRAINING AND CAPACITY BUILDING REQUIREMENTSCRITICAL

AREAS AND MECHANISMS

7-1

7.1 Overall Approach to Training and Capacity Building 7-17.2 Training and Capacity Building Requirements for MISs 7-17.3 Training and Capacity Building Requirements for GIS 7-17.4 Training in Corporate Governance 7-27.5 Training on Procurement 7-27.6 Training on Safeguards and Social Awareness 7-27.7 Training on Low Income service Approaches 7-2

8.0 ISSUES 8-1

8.1 Need for Improved Communication 8-18.2 Changes in the Roles and Inputs of Team Proposed in the Proposal 8-18.3 Provision of Working outside Sukkur, Linkages of Various Components and

Dependency upon their Outputs, and need for Greater Flexibility8-2

8.4 Need for Increased Number of Trips to Sukkur Allowable under the Contact 8-38.5 Need for Increased Inputs of Various Consultants 8-38.6 When and in What Sequence to Take on Different System Elements 8-48.7 Provision of Extra Resources for Customer Database and Billing System 8-4

9.0 SUGGESTIONS AND RECOMMENDATIONS 9-1

9.1 Monthly and Quarterly Meetings between NSUSC, PSU and Consultants 9-19.2 Recommendations for instituting a viable Performance Benchmarking Process in

NSUSC9-1


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Inception and First Quarterly Progress Report Table of Contents


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10.0 OUTPUTS 10-1

10.1 Documents related to Operations, Management Systems and Reform Initiatives 10-110.2 Documents Related to the Provision of Advice and Review for Tranche 1 and

Tranche 2 Subprojects10-1

10.3 Documents Related to the Provision of Advice and Assistance with ADBSafeguards Compliance

10-2

10.4 Documents Relating to the Institutionalisation of Sustainable Service Delivery forLow Income Consumers

10-2

10.5 The Program Monitoring and Evaluation System and Associated MonitoringReports

10-2

TABLES

Table 1-1 Six components being/to be implemented under SCIP 1-2Table 2-1 Inputs provided by team members so far 2-2Table 3-1 Staff requirement for development of GIS 3-13Table 3-2 Staff requirement for development of Information Systems 3-13Table 5-1 Linkage of all SCIP components 5-2Table 6-1 Timing of support and deliverables 6-2

Table 6-2 Revised Personnel Schedule 6-10Table 8-1 Changes in team members, roles and inputs of the team 8-2

FIGURES

Figure 1-1 NSUSC organization structure and Consultancy team 1-4Figure 3-1 Organisational Structure Khairpur 3-9Figure 3-2 Conceptual Design of GID System 3-16

ANNEXURE

Annex A2-1 Minutes of the Meetings A-1

Annex A3-1 Khairpur Transition Plan A-9Annex A3-2 Proceedings of Transition Workshop A-12Annex A3-3 Indicators Segregated by Type to Guide the Internal Discussion in NSUC for

Selecting the KPIs and Eventual Framing of IPPMSA-16

Annex A3-4 Requirements of IT Staff to Develop GIS and MISS and Their IndicativeQualification

A-21

Annex A3-5 Hardware and Software Requirements for NSUSC Office and Its Sub-Offices A-24Annex A3-6 Hardware Specifications A-27Annex A4-1 Workshop Design and Photographs A-35Annex A5-1 Comparative Analysis of the TOR for SCIP 2 and SCIP 5 A-37Annex A6-1 Activity Prioritization A-41Annex A7-1 Proforma 1 A: Establishment Inheritance to NSUSC A-47Annex A7-2 Proforma 1 B: UC Wise Establishment Details A-48

Annex A7-3 Proforma 2 A: Bio Data Form (Option 1Detail Form) A-49Annex A7-4 Proforma 2 B: Bio Data Form (Option 2Concise Form) A-51Annex A7-5 Proforma 3 A: Establishment Details of Daily Wage A-52


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Inception and First Quarterly Progress Report Acronyms & Abbreviation


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ACRONYMS & ABBREVIATION

ADB Asian Development BankADTA Advisory Technical Assistance (of the ADB)AMP Asbestos management planCAD Computer-aided designEIA Environmental Impact StatementEMP Environmental management planFMIS Financial Management Information SystemGIS Geographical Information SystemGoS Government of SindhHRMIS Human Resource Management Information SystemIEE Initial Environmental EvaluationIPPMS Investment Program Performance Monitoring SystemIT Information TechnologyLAA Land Acquisition ActMFF Multi-tranche financingMIS Management Information SystemMSOS Microsoft Office SharePoint

NRW Non-revenue waterNSUSC North Sindh Urban Services Corporation LimitedPSP Private sector participationPSU Program Support Unit of the Government of Sindh (under Planning and Development

Department)SAMA Services and Asset Management AgreementSECP Securities Exchange Commission of PakistanSCIP Sindh Cities Improvement (Investment) ProgramSWM Solid waste managementUSC Urban services corporationWWM Water supply and wastewater management


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Government of Sindh North Sindh Urban ServicesCorporation Limited

Asian Development Bank



(NSUSC)SCIP 2

Section 1

Introduction



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Inception and First Quarterly Progress ReportSection 1

Introduction


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1.0 INTRODUCTION

1.1 Background

The Government of Sindh has initiated the Sindh Cities Improvement Investment Program

(SCIP) with the assistance of the Asian Development Bank and with the aim of improving thequality, coverage and reliability of certain municipal services in clusters of secondary cities inSindh Province. The objective of SCIP is to enhance the urban environment, improve publichealth, and contribute to economic opportunities through service improvement. SCIP willsupport improvements in the efficiency, effectiveness, coverage and reliability of watersupply, wastewater collection and disposal, and solid waste management services inparticipating secondary cities.

The Investment Program valued at US$ 400 million is supported by a US$ 300 million Multi-tranche Finance Facility (MFF) from the ADB and will be implemented over 10 years. TheInvestment Programs overall impact will be improved health and quality of life for an

estimated four million residents in participating towns, resulting in improved economic

competitiveness of these towns. The outcome will be enhanced quality, coverage, andreliability of water supply, waste water management and solid waste management services.

Tranche 1 of the MFF, with a value of US$ 50 million of which the loan portion is US$ 38million, will be implemented over a three year period from 2010 to 2013. The Tranche 1investment provides: (i) institutional support and technical assistance to the Government ofSindh and the newly created North Sindh Urban Services Corporation (NSUSC) focusing onoperationalization of the Program Support Unit (PSU) and NSUSC, establishment of theurban unit, and building a strong platform from which to implement the reform program andinfrastructure works; (ii) physical investments in: (a) water supply system augmentation andrehabilitation, (b) pilot distribution network improvement (DNI) schemes in specific urbancouncil areas (c) groundwater monitoring; (d) urgent improvements to wastewater

management systems; and (e) solid waste management improvements; and (iii) financing foroperational support, intended to bridge the short-to-medium term operational cash shortfallsof NSUSC.

These services, (Program Management and Implementation Support for NSUSC, also knownas SCIP-2) are one of six consulting services and technical assistance packages eitherincluded under Tranche 1, or provided under ADB technical assistance associated with thefirst tranche. Under Part A of Tranche 1 consulting services are provided for: (i) independentverification (SCIP-1); (ii) Program Management and Implementation Support for NSUSC,(SCIP-2); (iii) Program support to PSU and GoS (SCIP-3); and (iv) Planning, design andsupervision services for tranche 1 sub-projects in the towns covered by the NSUSC (SCIP-4).

Under the ADB grant funding, technical assistance is provided for: (i)Component A whichwill support NSUSC to improve performance and implement organizational changes (SCIP-

5), and (ii) Component B which will improve NSUSC accountability to customers andcustomer service by raising awareness of reforms, improving communication, addressingconcerns of low-income consumers, and introducing consumer monitoring of servicedelivery. Table 1-1 below provides a brief description of the scope of each of theseconsulting services and technical assistance assignments. As is readily apparent, there are anumber of areas of intersection and some overlapping between these scopes of services, andthis will be covered in other sections of this report below.


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Table 1-1: Six Consulting Services and Technical assistance Components Being Implemented under SCIP

SCIP 1 SCIP 2 SCIP 3 SCIP 4 SCIP 5 SCIP 6

Independent verifier Support to NSUSC Support to PSU/GoSPlanning, Design and

SupervisionEfficiency & accountability of

NSUSC (ADB TA)Customer Awareness

(ADB TA)

Review Business Plans andApprove Annual FundingRequests

Verify Monthly Invoices Verify Performance Targets

and Deviations from theseTargets

Shift from Input to OutputBased Funding Mechanism

NSUSC Operations andManagement Systems andReform Initiatives

Advice and Review ofTranche 1 and Tranche 2Subprojects

Advice and Assist with ADBSafeguards Compliance

Institutionalize SustainableService Provision for LowIncome Consumers

Program Monitoring andEvaluation, and ResultsMeasurement

PSU Support and InvestmentProgram Monitoring andEvaluation

Provide Due DiligenceAdvice to Assist PSU toIdentify Town Clusters andAppraise Investments forSubsequent SCIP Tranches

Support the PSU toImplement the SCIP ActionPlan for Reform

Assist Start-Up and CapacityDevelopment of the UrbanUnit and Implementation ofUrban Planning Initiativesand Reforms

Urban Planning Initiativesand Reforms

Water Supply SystemMapping for Sukkur, NewSukkur, Khairpur, Rohri, andthe selected Tranche 2 towns

Water Supply Master Plansfor the selected Tranche 2towns

Wastewater ManagementMaster Plans for Sukkur,New Sukkur, Rohri,Shikarpur, and the selectedTranche 2 towns

SWM Master Plans for theselected Tranche 2 towns

Confirm Project Details andIdentify Information Gaps

Conduct Required Surveysand Investigations

Complete any additionalstudies and surveys requiredto fill the gaps for the detaileddesign of the subprojects

Assist with informationgathering

Benchmarking Implementation of

Improvement Programs

Develop and implementimproved outsourcing

Build Internal NSUSCexpertise

Develop private sectorparticipation (PSP) option

Implement PSP transaction Support to NSUSC staff and

management

Develop and implementpublic awareness andcommunication strategy and

plan

Computerised customerrelation system

Pro-Poor outreach complaintssystem

Develop and implement CRCsystem


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1.1.1 Program Management and Implementation Support, Support for North Sindh Urban

Services Corporation (NSUSC)

The SCIP has initiated reforms and investment, beginning first in Northern Sindh with acluster of six participating Taluka Municipal Administrations (TMAs). These six TMAs arelocated in several contiguous districts of Northern Sindh. Under the first phase of SCIP, thesesix TMAs have joined together to establish the NSUSC under the Pakistan CompaniesOrdinance, 1984.

NSUSC has been formed to provide a government-owned but professionally-managed utilitycompany tasked with improving services through institutional reform, operationalimprovement and infrastructure investment. NSUSC will adopt and then provide watersupply, wastewater management and solid waste management services in the urban areas ofthe six participating TMAs.

The goal of the NSUSC is to function as a commercially oriented service provider toprovide affordable services to the public and business in a self-sustaining manner. This

requires investment, a clear strategy for corporate growth, and the development of moredetailed business plans for shorter periods. It also requires that the corporation is staffed by acadre of strong management and professional staff, and is provided with adequateprofessional and technical support and assistance.

1.1.2 Objectives of Technical Assistance being provided by GHK

The Technical Assistance being provided by GHK will support the NSUSC to fulfil itsservice mandate and its responsibilities to implement capital works financed under the firsttranche of SCIP in a timely and efficient manner. The TA will provide advice and assistanceto NSUSC across three broad areas:

NSUSC operations, including institutional establishment and reforms; Tranche 1 subproject implementation; and Tranche 2 subproject preparation (for the north cluster only).The TA will also provide organised training sessions and on-the-job training to NSUSCmanagement and staff. Through this training and capacity building support, NSUSC will beprovided with:

advice on NSUSC operations and management systems; assistance with implementation of Tranche 1 subprojects; assistance with the review of eligibility and feasibility of proposed Tranche 2 subprojects; advice on compliance with ADB safeguard policies; assistance on the expansion of, and in the institutionalization of, sustainable service

provision to low income consumers; and

advice on establishing sound practices in program monitoring and evaluation, and resultsmeasurement.

Figure 1-1 presents the organisational structure of NSUSC and the shows the placement of theGHK consultants who are working embedded within the NSUSC structure and alongside thecorresponding NSUSC officers and staff.


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Figure 1-1: NSUSC Organization Structure and the Embedded Consultancy Team


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1.2 The Inception Report Coverage, Objectives and Timing

This is the first of the Consultants reports required under the Terms of Reference (ToR) for

this assignment. The report: (i) summarises preliminary findings of the meetings held withNSUSC management and staff over the (extended) inception period; (ii) present the outputs

from early stages of the work; (iii) presents preliminary findings and observations from theinception and mobilisation visits of a number of team members; (iv) identifies a number ofissues and recommendations that we envisage important for NSUSC and ADB to consider atthis stage; (v) identifies changes to the way or working and team which we believe are, ormay become, necessary during execution of the services; and (vi) look at the implications forour work programme and input schedule of the way of working and pace of outputs fromother areas of NSUSC work and associated consultancy inputs.

This report is delivered several weeks later than initially programmed. This is a function of:(i) the relatively slow build up of staffing and operationalization of NSUSC, and our need toengage with the appropriate officers and staff; (ii) the need for our team to understand thepace and sequencing of other consulting services and technical assistance activities (notably

SCIP-4 and SCIP-5) to be able to highlight any sequencing and coordination issues; and (iii)difficulty experienced by us in mobilising key staff in Sukkur in a timely fashion.

In view of these delays, this report covers the objectives of both the Inception Report and thefirst of the quarterly Progress Reports which will be generated throughout the duration of theservices.

1.3 The Report Structure

The report has been divided into the sections which are listed below:

1. Introduction2. Mobilisation activities (a brief description of inputs so far)3. Initial findings and observations (on NSUSC preparedness, readiness, fitness for fulfilling

its intended role, areas of early priority and focus for our services, any gaps etc.)4. Facilities provided by Client5. Linkages with other related consultancy and technical assistance packageslinks,

overlaps, gaps, critical path activities, opportunity to recommend coordinationmechanisms

6. Detailed Work Programrefined proposal work program and priority based on items 3,4 and 5 above

7. Training and Capacity Building Requirementscritical areas and mechanisms8. Issues emerging during the works so far9. Suggestions and Recommendations on Scope, Timing and Resourcing of Services10.Outputsconfirm what we are expecting to produce and when.


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(NSUSC)SCIP 2

Section 2

Mobilisation Activities



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Page 2-1

2.0 MOBILISATION ACTIVITIES

2.1 Team Mobilisation in the Field

Our services effectively commenced on the 14th of February 2010 when GHKs joint Team

Leader, Dr. Jim Arthur, arrived in Karachi for a preliminary round of meetings with PSU andNSUSC, including the Project Director of PSU and managing Director of NSUSC. The initialround of meetings in Karachi also included a joint meeting between the PSU, NSUSC and theSeureca Team for SCIP-5, which enable issues around division of responsibilities onpotentially overlapping ToR tasks to be addressed. Dr Arthur then visited NSUSC office inSukkur from 16th to 18th February during which preliminary discussion were held with thoseofficers present on: (i) the proposed timing of ramping up of NSUSC staffing and operations;(ii) the prioritisation of activities and likely early demand for GHK assistance; and (iii)logistical matters relating to office accommodation etc. Following return to Karachi on 19th ofFebruary 2010, further meetings were held with the, PSU, NSUSC, and the Seureca team,along with the Asian Development Bank, to confirm activities and priorities.

2.2 Inception Stage Visits of the Other International and National Consultants

Based upon the mobilisation visit of the joint Team Leader, and his discussions with theNSUSC Managing Director and those of his senior officers who were already engaged withNSUSC at that time, other team members were mobilised to start working with the NSUSCteam on what were considered to be the most critical and urgent activities. This has continuedto be the pattern, as we have attempted to mobilise staff in response to requests from NSUSCfor particular assistance. However, the intermittent nature of the services and difficulty inpredicting demands well in advance has meant that GHK has not been as responsive toNSUSC assistance demands as we would have liked. This issue is addressed in some detaillater in this report.

Table 2-1 shows the inputs provided so far by various team members. Although there hasbeen regular interaction of these team members with the NSUSC management (both inSukkur and remotely) and a large number of meetings and discussions have been held, onlythose minutes from what are considered to be the most important meetings have beenprepared and are included at Annex A2-1.


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Table 2-1: Inputs provided by team members so far

Sr.

No.Name of Consultant Designation

International

/ NationalStation

Date of Mobilisation Total InputdaysFrom To

1) Dr. Jim Arthur Utility Management Advisor/Joint Team Leader International Karachi & Sukkur 14-02-10 19-02-10 6

2) Mr. Keith Stallard Water Utility Expert/Joint Team Leader International Karachi & Sukkur 13-03-10 24-03-10 24

23-04-10 07-05-10

3) Mr. Farhan Anwar Municipal Service Delivery/Low Income UnitSpecialist

National Sukkur 22-03-10 27-03-10 6

4) Mr. Sohail Anjum Information Technology and Website Design & MgtSpecialist

National Sukkur 27-03-10 02-04-10 7

5) Mr. Muntazir Mehdi GIS, Mapping and CAD Specialist National Sukkur 23-04-10 30-04-10 8

6) Mr. Imran Khan1 Financial Systems Advisor National Karachi & Sukkur 15-04-10 23-04-10 87) Mr. M. Shahid Alvi Human Resource Management Specialist National Sukkur 25-04-10 02-05-10 8

8) Mr. Noor Muhammad Monitoring and Evaluation Specialist National Sukkur 30-04-10 10-05-10 10

9) Mr. Fawad Khan Municipal Service Delivery / Low Income UnitAdvisor

International - - - -

10) Mr. Kevin Tayler WSS Engineering Advisor International - - - -

11) Dr. Peter Lingwood SWM Engineering Advisor International - - - -12) Mr. Muhammad Niazi Khan Project Economist and Financial Analyst National - - - -

13) Ms. Mehreen Hosain Social Safeguards Specialist National - - - -

14) Mr. Mohsin Babbar Communications/Public Awareness Specialist National - - - -

15) Mr. Furrukh Zia Sheikh Legal Counsel National - - - -

16) Mr. Ian Bartlett Municipal Finance, Tariff and Regulatory Advisor International - - - -

17) Mr. Henning Reini Financial Systems, Procurement & ImplementationAdvisor


18) Mr. Derek Ratcliff Environmental Safeguards Advisor International - - - -

19) Mr. Andrew Mcintyre Land Acquisition and Resettlement SafeguardsAdvisor


1 Imran Khan is not part of the team, but made an initial visit to work with NSUSC on Financial Systems in view of the unavailability of Henning Reini for early inputs


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2.3 Inputs from the Remaining Team Members

As stated above, the services being provided under this contract can broadly be divided intotwo distinct types: (i) advisory services to NSUSC management and operational staff onNSUSC organization structure, plans, programmes and operational activities etc; and (ii)

support to NSUSC in reviewing designs and contract documents (for Tranche1) and projectpreparation documents (for Tranche 2) and other outputs from the design services contract(SCIP-4). While the inputs of those team members who are focused on operation supportcontinues throughout the duration of the contract, those of team members who are largelyfocussing on safeguards or review of outputs from SCIP-4 will, to a significant extent bedictated by the schedule of outputs from SCIP-4 activities.

The scheduling of outputs from SCIP-4 particularly impacts on the timing of inputs by thefollowing SCIP-2 team members:

Role Name Activity

WSS Engineering Advisor Kevin Tayler Review of Water Supply andWastewater Management Detailed

Designs and contract DocumentsSWM Engineering Advisor Peter Lingwood Review of Solid Waste Management

Detailed Designs and ContractDocuments

Environmental Safeguards Advisor Derek Ratcliff Review of Environmental Safeguardsfor Tranche 1 and proposed Tranche 2subprojects

Land Acquisition and ResettlementSafeguards Advisor

Andrew Mcintyre Review of LAR Safeguards forTranche 1 and proposed Tranche 2subprojects

Social safeguards specialist Mehreen Hosain Review social safeguards provisions ofproposed Tranche 2 subprojects

Project Economist and Financial Analyst Mohammed Niazi Khan Review Economic and Financialanalysis of proposed Tranche 2subprojects

In addition the inputs of the Furrukh Zia Sheikh (Legal Council) and Noor Mohammed(Monitoring and Evaluation Specialist) are to some extent dependent upon the work programand outputs from SCIP-5 (ADB TA for efficiency and accountability of NSUSC)

It is currently hard to fix precise input schedules for the above project staff as we are currentlynot entirely clear as to when corresponding outputs will be forthcoming from SCIP-4 andSCIP-5. However, we believe that in addition to liaising closely with the other consultingteams to obtain a good understanding of their output schedules as work plans are furtherdetailed, it would also be useful to try to include greater flexibility in the way in which theSCIP services are delivered. This proposal is discussed in greater detail later in this report.

The CV of the proposed Communications Specialist, Mr. Mohsin Babbar has been approvedon 20th May 2010 by NSUSC and the Asian Development Bank and he will be mobilizedwithin the next two weeks to carry out an initial input to assist the NSUSC in developing theircommunication strategy and action plan.


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(NSUSC)SCIP 2

Section 3

Initial Findings and Observations



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3.0 INITIAL FINDINGS AND OBSERVATIONS

This section presents initial findings and observations of the team members who have visitedthe NSUSC so far.

3.1 General

3.1.1 Preparedness and Readiness of NSUSC to fulfil its Intended Role

Establishment of NSUSC is an ambitious step by the Government of Sindh and AsianDevelopment Bank. By establishing NSUSC, the Government of Sindh is committing to astep-change to the way in which services are delivered in Northern Sindh. Inevitably, in theearly stages of its establishment, focus on its service delivery mandate is deflected by thestart up necessities of: (i) hiring staff; (ii) establishing the office; (iii) ensuring theavailability of logistical and technical support; and (iv) establishing relationships withGovernment partners and other stakeholders. Even when new staff are hired, many arerelocating from other parts of the country and there are issues related to organising relocation

and settling in Sukkur.

The Start-up phase of NSUSC establishment is a complex task in a difficult environment andthis is challenging the morale of some staff. We recognise that NSUSC staff need to bemotivated to perform, and need to be assisted in understanding their roles and responsibilitiesin the company. We suggest that the following initiatives might help:

Supporting relocation and establishment of staff and their families in Sukkur. Improving the conditions under which staff work by hastening the installation of a

items such as a generator, light bulbs and other office facilities.

Resolving transport issues

Providing logistical, secretarial and other forms of support. Clarifying roles and responsibilities through job-descriptions and ensuring that staff

have useful work to do.

Clarifying conditions of employment, including benefit and compensation packages,and performance-related components of remuneration packages.

GHK has started supporting NSUSC by:

1. Providing assistance in the first stages of operationalization of NSUSCin particularthe adoption of service responsibilities in Khairpur

2. Assistance with the organisational structure and HR proformas for staff taken intoNSUSC from Khairpur TMA

3. Initial assessment and development of proposals for IT needs, and MIS system anddesign and operation of a NSUSC website4. Initial assessment of likely GIS requirements and systems for adoption by NSUSC5. Preliminary assistance in the development of financial management accounting and

reporting systems for NSUSC6. Initial assistance is the establishment of systems for performance measurement,

benchmarking and monitoring and evaluation of NSUSC and investmentperformance

We will continue helping NSUSC prepare itself for its role by:

1. Continuing operational support in critical areas where NSUSC identifies the need forparticular assistance

2. The establishment of financial management, accounting and reporting systems


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3. Assistance with business planning and budgeting4. Assistance with the continued development of HR and personnel management

systems5. Assistance with the continued development of IT and MIS systems and in eth

building and development of the website6. The development of suitable models for the progressive increase in tariff7. Commence work on customer relations and publicity

3.1.2 Building on the Strong Private Sector Experience in the Staff of NSUSC, and

Addressing the Lack of Utility Experience.

We are aware that, with the notable exception of the Managing Director, few of the other keystaff of NSUSC have had any experience of working in a utility company of any kind, letalone a water utility. Fortunately, few have direct experience in a sector which is dominatedby the Government in Pakistan, and which has historically been characterised by perverseincentive structures. In contrast, most of the senior staff have come from a commercial andprivate sector background and are thus familiar with the ways in which a commercial

approach to services can: (i) induce the right incentive structures; (ii) provide a focus on theachievement of outcomes (rather than a focus on inputs); and (iii) ensure that attention iscontinually paid to the cost-effectiveness of service provision. The familiarity of key staffwith a business approach to services, and the concept of accountability is critical to thesuccess of NSUSC. The advisory support services need to be affective in supporting the keystaff in understanding the basic aspects of delivering a public sector utility service, whilecapitalising on the wealth of private sector experience which the senior management teambrings to NSUSC.

A key challenge for NSUSC is completing the engagement of middle management staff and,once they are engaged, ensuring that a common approach and ethos is developed in NSUSCmanagement to build a feeling of belonging and which will in turn strengthen the

professionalism and performance of the organisation. This ethos needs to be inducedthroughout the organisationfrom senior management down to the sweepers. The potentialfor real organisation transformation can already be seen in the reaction of the Khairpursweepers to being given the opportunity to become part of NSUSC.

Developing the organisational structure of NSUSC and helping build an efficient servicedelivery organisation is a key objective of GHKs services under the contract, and we will be

focussing on the following key activities:

Mapping the proposed situation and structure through: (i) a detailed study of the proposedorganizational structure; and (ii) discussions with key stakeholders to understand the structurein terms of its suitability for information and work flow, timely decision-making, role clarity

and accountability, span of control and hierarchy, and coordination mechanisms.

Development of staffing plan and design of a framework to deploy employees within theagreed organization structure, delineating levels of service and tasks, geographical coverage,physical and financial value, spans of control etc., and estimating appropriate numbers of staffto tackle different levels of activity. In particular we need to support NSUSC in consideringhow staff transition from Talukas to the NSUSC takes place, and how the difficult issues ofstaff productivity and staffing reductions are best handled.

Development and Preparation of a Human Resource Policy which willhelp in guiding andimplementing HR systems including recruitment, supervision, performance management,discipline, health and safety. HR policies, rules and regulations will need to draw oninformation from: (i) internal sources: through interaction with NSUSC to understand therequirements of staff at each level, business drivers, operating environment and


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business challenges; and (ii) external sources: (a) GHKs extensive HR research andexperience on numerous other similar client engagements; and (b) HR benchmarking data forthe sector.

Developing job descriptions with clear job specifications to provide clarity for individualemployees and management in understanding what is expected of each post-holder infulfilling their role. Development of job descriptions will include: (i) identification of uniquepositions with descriptions developed against positions within departmental structures; and(ii) development of job descriptions which include definition of: key sector service;responsibilities; tasks; and skills required. A written job description will be the main output ofthe job analysis process, which can be used as the basis of a personnel staff specification.

Employee contracts: The development of a standard form of contract format for theengagement of all employees.

Employee communication: Establishment of mechanisms to establish effective internalcommunications within the organisation, which is necessary to ensure the success of the HR

systems: Hierarchical barriers to communication need to be eliminated in order to allow forthe facilitation of easy two-way communication. This requires the development of aneffective internal communication plan for the organization and an innovative communicationstrategy for employees that might include such things as employee monthly newsletters,employee of the month awards etc.

Staff Performance Frameworks and Appraisals: Development of transparent incentivemechanisms to improve staff performance through staff performance frameworks whichprovide the opportunity for bonus structures, performance-related pay or other rewards. Suchmechanisms depend on setting robust key performance indicators (KPIs) and targets whichare linked into the monitoring and evaluation system including staff appraisals. The KPIsneed to be small in number, measurable, and outcome driven. They will also need to be

established within the service delivery framework for improved service quality, reliability andcoverage (consumer satisfaction, efficiency, cost recovery, returns on investment etc). Theincentive mechanisms need to be applied to both senior and more junior personnel withspecific delivery responsibilities; and to private partners if there is a contract arrangement.

3.1.3 Political Ring-fencing of the Utility

Another issue of critical importance is the need to politically ring-fence the utility, in order toenable it to function in such a way as to focus solely on its service delivery mandate. Thefundamental rationale behind the establishment of the NSUSC is to remove the operation andmanagement of the utility and service provider away from direct political interference, and toensure that the investments made under the program are entirely directed towards system

improvement in the most cost effective manner possible. We well understand that this is notan easy task. Vested interests are strong, and even when NSUSC has taken over the assets,existing systems of patronage (local mafias) will still make attempts to capture resourceseither through exiting service arrangements and contracts inherited by NSUSC, or throughattempts to manipulate bidding procedure to capture fresh contracts tendered by NSUSC fornew work. Assistance will need to be provided to NSUSC to help guard against this capture,partly through ensuring transparent and accountable procurement procedures.

An example of some of the challenges faced was demonstrated in recent meetings attended bythe consultants at the office of DCO Khairpur. These firstly exposed the practice of extortioncommon in traditional TMA staffing arrangements, and clearly indicated that NSUSC, evenin its infancy, is not immune to political interference. Secondly, NSUSC was being asked tocomplete works that relate with a transport project being executed by the provincialgovernment, and NSUSC despite lack of sufficient human or financial resources, inevitable


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feels obliged to at least give some indication that problems of this nature will be looked at.After all, quite rightly, NSUSC is seen as a centre of technical excellence in Northern Sindh,and such requests are not likely to diminish as the organisation progressively adopts andoperates TMA infrastructure and service systems. Addressing these issues is a key challengefor NSUSC, and needs to be an important element of the support provided under theseservices.

The relationship between TMAs and NSUSC is set out in the Service and Asset ManagementAgreements signed with each TMA. In some areas, the SAMAs, and the arrangements forassociated services that NSUSC will provide, need strengthening. GHK will help NSUSC dothis as required under section 1(ii) of our Terms of Reference which provides for: Advice onongoing preparation, implementation, and updating of SAMAs, the core document delineatingthe roles and responsibilities of the NSUSC and the local governments in service delivery,and Assist NSUSC to prepare and update SAMA schedules as needed, and in implementingits Tripartite Financing Agreement between NSUSC, the GoS and local governments Thistask will be commenced once sufficient information has been collected (supported by SCIP-5)to define existing and desired levels of service.

A further important mechanism for establishing the independence of NSUSC and protecting itfrom Government interference will be the creation and dissemination of a communicationsand public awareness strategy and programme. GHK will help NSUSC develop andimplement such a strategy, and NSUSC management has already alerted us to the necessity ofcommunicating the roles and responsibilities of NSUSC to key stakeholders in the localgovernment and community at large. We believe that mechanisms need to be developed foreffective, timely and accessible two-way communication that consistently reaches allemployees and external stakeholders through a variety of formats and approaches appropriatefor NSUSC.

We believe that it is critical that the NSUSC build strong relationships, and inculcate a culture

of cooperation and constructive dialogue in its relationship with the TMAs and communities.We will facilitate the adoption of a consultative process with all relevant stakeholders and thecreation of a sense of ownership of this by both NSUSC and TMA staff. The team will helpthe NSUSC institutionalize the stakeholder consultation process through formalizing meetingsof the NSUSC and TMAs.

As the establishment of the NSUSC is as yet in its early stages, it may be appropriate to createa Communications Specialist position to lead stakeholder consultations.Organizations need tocontinuously improve in order to improve their efficiency and maintain their competitiveness,and customer feedback plays a pivotal role in helping the organization to improve systemsand processes. It also plays an important role in maintaining transparency and thus defendingits independence.

3.1.4 Transition of TMAs

One of NSUSCs most critical and difficult activities is the progressive transfer of staff andassets from the TMAs to NSUSC, starting with TMA Khairpur. This has to be supported bythe creation of the necessary financial and documentary procedures and the putting in place ofsystems to: (i) bring staff onto NSUSCs books and provide the associated HR frameworks,and (ii) accurately document, categorize and profile the assets being transferred. There is anurgent need to: (i) determine what records are available with the TMAs on their assets to betaken over; and (ii) based on this, design mechanisms to: (a) verify data which does exist; and(b) collect and record whatever information is missing. Our experience suggests that: (i) verylittle information will be readily available; (ii) what information does exist will be hard tolocate; and (iii) there will be a wealth of undocumented information held by the systemoperators, valve men etc. which needs to be captured and documented.


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The smooth transfer of staff and assets from TMA to NSUSC is a critical prerequisite forNSUSC being able to develop plans to operate these assets more efficiently. The first priorityin support of this process as indicated by NSUSC, is to: (i) obtain whatever exists in terms ofan asset inventory or register; (ii) engage qualified staff to supervise and document thecollection and documentation of all available information; and (iii) utilise the support of GHK(and Seureca, who are responsible for database collection) to assist. This is likely to be acomplicated process and a learning experience. Once this process has been completed for thefirst town (Khairpur) the learning should be incorporated into the handover for subsequenttowns (Larkana on August 3rd 2010 and Shikarpur on September 1st 2010) and should makethe exercise progressively more efficient.

This process would also have to involve the establishment and introduction of the relevantHR policies and guidelines for TMA staff assimilation into NSUSC. One particular challengerelates to the fact that, in general, only operational staff at the lower levels of the skilledworker category are being transferred from the TMAs to NSUSC, leaving most of the staff athigher skill levels and the management-level staff such as the engineering staff andsuperintendents at the TMA. At the same time, NSUSC management is presently complete

only at the higher management levels, and while more middle level managers are being hired,NSUSC may face a challenge in managing the workers assigned to NSUSC at a critical periodwhere they need to be managed and guided in carrying out their work effectively under thenew management structure. We will need to assist NSUSC to ensure that any such vacuum isquickly and effectively filled.

If the reforms which the NSUSC is bringing to the sector are to be sustained, there has to be aquick and measurable rise in the quality of service delivery. For this to happen, NSUSC hasto have access to information on the networks and systems it is operating. For this to bemeasured, NSUSC has to have access to data which can enable it (and its customers) tomonitor it service delivery performance. This means the establishment of databases as ameans of establishing a baseline and against which performance can be benchmarked. We

understand the need for rapid and effective information collection and we will work withclosely with both NSUSC and with the SCIP-5 consultants, Seureca, in establishingdatabases. Under the SCIP-5 ToR, Seureca are responsible for the collection of informationand data which relate to (i) system management, (iii) technical and operational matters, (iii) asthe basis for the SAMAs and (iv) for the establishment and operation of a benchmarkingsystem for the monitoring and evaluation of its performance. We need to work with NSC andSeureca on a strategy and action plan needs to be developed to begin this process in the fairlyshort term.

3.2 Transition of Khairpur TMA

Transition of the first of the six TMAs (Khairpur) commenced on 5th May 2010 and

culminated with an official handover ceremony on 19th May. NSUSC was provided fullsupport by the Joint Team Leader Keith Stallard in developing the Transition Plan includingthe design of a workshop with concerned Khairpur TMA officials and staff. A note on thedesign of this workshop, along with some photographs from the workshop, are reproducedbelow in Annex A4-1. Support has been provided to help NSUSC develop a plan for thesuccessful takeover of assets, staff and services in Khairpur. Khairpur Transition Plan is partof Annex A3-1 and proceedings of the transition workshop are in Annex A3-2.

NSUSC was also provided with support on developing an organogram for Khairpur TMA andNSUSC which is shown at Figure 3-1. It is anticipated that this will form a model for theorganisational structure of NSUSC in the other towns.


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Following the takeover, a meeting was held between NSUSC, DCO Khairpur andAdministrator Khairpur to discuss the specific steps required in the context of the progressivetakeover of system management. This meeting was able to agree:

1. That the basis for the agreement between NSUSC and Khairpur TMA should be inthe nature of a Partnership agreement. While the partnership-style relationship ispotentially a good arrangement, we need to ensure that all parties understand theindependent nature of NSUSC.

2. The SAMA will guide the provision of services by the NSUSC to the TMA. A noticeof commencement of the Service and Asset Management Agreement needs to beissued. However, this can only be done once all assets, including those required forservices during the monsoon have been made available or transferred to thesatisfaction of NSUSC.

3. Information is needed to set performance standards and objectives. It is suggestedthat NSUSC and Khairpur TMA set up a small working group to determine baselinelevels of service and agree and formalise future improvements in levels of service asrequired by the Service and asset Management Agreement and the Operating Support

and Capital Investment Grant Agreement.

Important factors which must be taken into account in implementation of the agreementbetween NSUSC and Khairpur TMA (and similarly with the other town) are:

Maintaining the independent status of NSUSC: The TMA and NSUSC have agreed aService and Asset Management Agreement (SAMA) which sets out the objectives of theTMA/NSUSC arrangement and the roles and responsibilities of the TMA and NSUSC.NSUSC is independent and not under instruction from the TMA and should not let such arelationship develop. This is set out in section 14.3 of the SAMA as follows:

14.3 I ndependent Status. Neither the TMA nor any of its employees shall

have any control over the manner, mode or means by which the Company, itsagents or employees, perform the Contracted Services. The Company shall

perform all services required herein as an independent contractor of the TMAand shall remain under only such obligations as are consistent with that role.The Company shall not at any time or in any manner represent that it, or anyof its agents or employees, are agents or employees of the TMA.

Notice of commencement of Service and Asset Management Agreement: NSUSC needsto formally give notice to the TMA of the date of commencement of the SAMA. As the dateof effectiveness requires, amongst other conditions precedent, that deputed staff have beentransferred to the satisfaction of NSUSC.

The conditions precedent which have to be met before the SAMA becomes effective are setout in section 5.0 of the SAMA transcribed below:

5.0 CONDITIONS PRECEDENT TO EFFECTIVENESS

5.1 The following shall be conditions precedent for the effectiveness of thisAgreement:

(a) The Company has submitted a Business Plan to the satisfaction ofthe TMA.(b) A list of the Deputed Staff has been made available and theDeputed Staff has been transferred to the satisfaction of the Company.(c) The Entrusted Assets have been made available or transferred tothe satisfaction of the Company.


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5.2 The representative of the Company shall, upon fulfilment of the conditionsprecedent hereto, give notice to the TMA specifying the date ofcommencement of this Agreement.5.3 The Company and the TMA have entered into a Tripartite FinancingAgreement with the Government of Sindh (GoS), as described in 8.6.

Transfer of TMA assets: The SAMA does not become effective until the Entrusted Assetshave been made available or transferred to the satisfaction of NSUSC. This refers to all fixedand non-fixed assets necessary for the provision of the services which NSUSC is contractedto provide. This will include any equipment of which the prime purpose is to ensure that thewater, wastewater, drainage and solid waste management services are provided during themonsoon. The conditions under which these assets are transferred or made available toNSUSC are set out in clause 4.1.1 of the SAMA:

4.1.1. Transfer of TMA Assets. The TMA shall make all fixed and non-fixedassets and associated land owned by TMA necessary for the provision of theContracted Services available to the company, on lease, without any

encumbrance, as and when required by it for the purpose including thosespecified in Schedule 3 hereof, as amended from time to time. The ownership

of the Entrusted Assets shall remain with the TMA.

The SAMA is not very specific on important issues, particularly the services that NSUSC isto provide. . For instance, it does not fully specify the exact nature and details of the servicesto be provided.

Development of the Services and Asset Management Agreement: In a number of areas, theSAMA signed with Khairpur TMA is a little more than a framework and needs to bedeveloped. For example, section 3.1 of the SAMA says that The objective of this Agreementis to continually improve or increase levels of service ... and section 4.2.2 says that the the

Contracted Services will be performed in a competent, professional and satisfactory mannerand shall meet the levels of services specified in Schedule 5 hereof . However, Schedule 5does not set out any levels of service for water supply, wastewater management or solid wastemanagement. (It sets out only a few related administrative requirements.)

It is recommended that the NSUSC and Khairpur TMA set up a small, joint working group(probably chaired by NSUSCs Director for Operations and Services), to determine thebaseline levels of service at effectiveness date and to agree achievable goals for levels ofservice over the next few years. These targets need to be reflected in Schedule 5 of theSAMA. In addition,NSUSCs Business Plan and Operating Plan must set out how they willbe achieved to the satisfaction of the TMA. Baseline and future levels of service must bespecified so that: (i) the TMA can monitor and evaluate the performance of the Contracted

Services and attainment of the levels of Service in accordance with Schedule 5 (SAMAsection 4.1.4 Monitoring and Evaluation); and (ii) the Independent Verifier can determineand certify achievement by the Company of Performance Targets specified in the Schedules tothe SAMA (Tripartite Financing Agreement section 6.2)

SAMA section 4.3 sets out the framework within which these levels of service are to bedeveloped:

4.3.1 Baseline Survey. The Parties shall gather baseline data and develop abaseline for the Contracted Services, which shall serve as a performanceindicator for evaluating the service obligations of the Company hereunderand the attainment of the objective of this Agreement.


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4.3.2 Setting Higher Levels of Service. The Parties shall consult andcoordinate with Customers and each other in developing, adopting anddelivering higher Levels of Service for the Contracted Services.

Both the SCIP-2 and SCIP-5 consultancy contracts require the consultants to support NSUSCin these activities:

SCIP-2 TOR includes: Service and Asset Management Agreements (SAMAs), Tr ipar ti teF inancing Agreement and ADB Project Agreements. Advise on ongoing preparation,implementation, and updates of SAMAs, the core document delineating the roles andresponsibilities of the NSUSC and the local governments in service delivery. Assist NSUSC toprepare and update SAMA schedules as needed.

SCIP-5 Assist with I nformation Gatheri ng. Assist NSUSC design and implementinformation-gathering programs required under the Investment Program Services and AssetManagement Agreement and required for effective NSUSC operation. The programs willinclude establishing baselines for the operational indicators for water, wastewater and solid

waste management


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Figure 3-1: Organisational Structure Khairpur TMA

Managing Director

(1)

Director Operations and

Services (1)

Technical Manager - Water

and Wastewater(1)

Assistant Manager Operations(AMO) - Khairpu r(1)

Chief Sanitary Inspector

BS 11 (1)

Cwowkidar

BS 2 (8)

Beldar

BS 2 (4)

Drivers

BS 5 (5+5)

Secondary Collection,

Transportation and

Dumping

Primary Collection, Street

Cleaning etc.

Operation Wing

Water Supply(37+40=47)

Drainage

(56+28=84)Solid Waste Management

Sub EngineerMechanical

and Electrical (1)

Local Support Unit

Sub Engineer - Civil

(1)

Assistant LSU

(1)

Manager Customer Care and

Quality Assurance (1)

Technical Manager - Solid

Waste (1)

Out Reach Office - Khairpur

Technical Advise and Support

Manager Finance

(1)

Manager Administration,

Inventory and Human

Resource (1)

Director Finance

(1)

Administrative Advise and Support

Customer Care Centre

Customer Care Operators

(3)

Muqadam

BS ? (1)

Technicians

BS ? (1)

Drain CleanerBS 2 (1)

Sanitary WorkerBS 2 (1)

Admin, Billing andRecovery Wing

Supervisor

BS 11 (1)

Electrician

Bs 5 (1)

Mali

Bs 3 (1)

Pump OperatorBs 5 (6)

PlumberBs 6 (2)

Chowkidar

Bs 2 (2)

HelperBs 3 (1)

HelperBs 3 (11)

Beldar

BS 2 (9+10)

Valve man

Bs 3 (3)

Charge Man

BS 10 (1)

Pump Driver

BS 5 (1)

Pump OperatorBS 3/4(17)

Sanitary WorkerBS 2 (16+20)

ColiBS 2 (5+8)

Muqadam

BS ? (1)

HelperBS 2 (9)

Beldar

BS 2 (4)

Chowkidar

BS 2 (2)

Billing and Recovery

Clerks BS 5/7 (4)

Foreman Electrical and

Mechanical (1)

Technical Advise in Civil Works

Technical Advise in Mechanical

and Electrical Works

Technical Manager Solid Waste willbe the reporting authority for SolidWaste Management function

Technical Manger Water and Wastewaterwill be the reporting authority for WaterSupply and Drainage function

Manager Capital Works

(1)

Procurement and Contract

Specialist (1)

Sanitary Inspector

BS 6 (1)

Assistant Sanitary

Inspector - 1

BS 5 (1)

Assistant Sanitary

Inspector - 2

BS 5 (1)

Head MuqadamBS 4 (1)

Muqadam

BS 4 (11)

Sanitary WorkerBS 2 (100R+C)

Muqadam

BS 4 (15)

Sanitary Worker

BS 2 (150 R+C)


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3.3 Performance and Monitoring Indicators for NSUSC

As an initial input into developing a monitoring and evaluation system, the team hasdeveloped a discussion paper for Performance and Monitoring Indicators for NSUSC. Theobjective of the discussion paper is to highlight the key performance indicators which have

been part of the contractual agreements between the Asian Development Bank, NSUSC andthe different TMAs which are to enter into a relationship with NSUSC. The exercise willhelp identification of key performance indicators and link these with the IPPMS framework.Broadly, the indicators will have three different levels which are inter-related as performancein one area affects the outcomes in the other. Following are these three important indicatorlevels:

Organizational indicators: These indicators will focus on the areas of progress ondeveloping the internal structures and enabling systems which could be used to establish thestatus and progress of NSUSCs ability to effectively carry out its stated mandate. Followingare the broad areas for which indicators are needed to reflect the growth and efficiency ofNSUSC:

1. Financial Systems including Revenue and Expenditure2. Human Resource Systems, Merit Based / Selection / Pay / Promotion etc3. Environmental Safeguards4. Poverty Targeting and Addressing5. Customer Issues and Complaints Redressed6. Gender Equality7. Capacity Improvement Indicators / Ability Improvement8. Communication (Internal and External )9. Coaching and MentoringService Delivery Indicators will help NSUSC make informed decisions on the improvement

in the services being provided by NSUSC to its intended customers. The services whichNSUSC intends to provide fall into three distinct service delivery areas i.e. drinking watersupply, wastewater treatment, and solid waste management. The International BenchmarkingNetwork for Water and Sanitation (IBNET) indicators provide detailed units, formulas andinformation on categories, and techniques for monitoring of these indicators. Given that thereis a need for instrumentation like flow meters and testing equipment, the data on some ofthese indicators can only be collected once the data collection tools become available toNSUSC.

1. Growth rates of customer served in drinking water, waste water and by solid wastecollections

2. No of Projects Implemented and Completion in time3. Increase in the quality / timeliness / frequency of services4. Institutionalization of new contracts with the private sector or TMAsGovernance and Accountability Indicators are an important set of indicators which willensure that NSUSC has the enabling systems and processes which will enable it to continue tofocus on its prime customers, which are the citizens of the participating towns. The indicatorswould assess the ability of NSUSC in maintaining a sustained effort to deliver high qualityoutputs for its customers.

1. Consumer say in the planning process of NSUSC Operations2. Access to information about NSUSC and its Operations to Citizens and Civil Society3.

Concern of citizens taken in account in board decisions4. Attendance at Board meetings and decisions made on agenda items and minimumpending decisions


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5. Inclusiveness of Civil Society in evaluating the impact of the interventions undertaken byNSUSC

6. Conformance with Security and Exchange Commission of PakistanThere are various types of indicators which become relevant within the four different stagesof the overall process, namely input indicators, process indicators, output indicators andoutcome indicators. Input indicators will highlight the presence of pre-requisite inputs forstarting the process. Once any process starts, indicators are identified to better control theprocess as it happens. The output indicators define the desired level of output with parametersdefined. Outcome indicators are measured through a combination or one or more indicators.At the initial stages of the project, many of the indicators that need to be reported against arethe input indicators. As service delivery activities are commenced so process indicators wouldbe established and reporting would commence on a number of processes which are takingplace. Output indicators usually relate to the end product delivered to the customers.Indicators can represent attributes like quality, quantity or timeline for completion ofactivates. Outcome indicators relate to measurement of the success of the outputs inachieving the predicted outcomes.

In the case of NSUSC, as it will be taking over existing systems which are alreadyoperational, it will be necessary to establish a set of outcome indicators early on in theprogram so that the impact of NSUSC takeover on service quality can be measured.

IBNET is an initiative to encourage water and sanitation utilities to compile and share a set ofcore cost and performance indicators, and thus meet the needs of the various stakeholders.Quantitative Indicators with measuring units are available for technical indicators. As thesystem is established, and data becomes available, most of these process indicators can beincluded in the M&E System.

The IBNET indicators will help benchmark a number of services across the participating

towns and other cities in Pakistan and globally. Given that the baseline data for a number ofthese indicators is not available, the first attempt should be made as soon as possible ongetting the base line established for the IBNET indicators. (the baseline information is to becollected through assistance under the SCIP-5 technical assistance). The institutional reformindicators in general will reflect the ability of NSUSC to provide for the acceptable level ofservices.

Annex A 3-3 presents the indicators segregated by type to guide the internal discussion inNSUC for selecting the KPIs and eventual framing ofthe IPPMS. We believe that these willbe finalised during next phases of the inputs by the monitoring and evaluation expert.

3.3.1 Reporting Arrangements with ADB

Under the Framework Financing Agreement (FFA) the Monitoring, Evaluation, andReporting Arrangements have been clearly laid down. The EA through the PSU will establishan Investment Program Performance Monitoring System (IPPMS) in form and substanceacceptable to ADB. The IPPMS will first select a set of performance monitoring indicatorsrelating to service delivery, institutional reform, physical implementation, and capacity-development milestones, including those in the Design and Monitoring Frameworks(Schedule2). The EA, through the PSU, will establish baseline data for each of the selectedindicators and will conduct annual surveys with the assistance of consultants, and updateADB on the progress against each indicator. The EA, through the PSU, will also prepare andsubmit quarterly progress reports for the Investment Program, including information on theimplementation progress of each subproject under the Facility.


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The NSUSC and ADB will conduct quarterly reviews of the progress in the implementationof

(i) Reform Program(ii)Physical elements of the Investment Program.Mid Term review of the Facility will be conducted within the fifth year of the approval of theFacility, and in the case of NSUSC a mid-term review mission will be conducted for the firsttranche loan within eighteen months of loan approvali.e. in late 2010 or early 2011.

3.4 Information Technology and Management Information Systems

The Information Technology (IT) specialist is envisaged to provide inputs for the period ofsix months over a two years time period. Initially the specialist has provided input for 7 daysin the month of March-April 2010. The key purpose of the first input was to make initialassessment of the requirements of the NSUSC in terms of IT systems, software and hardware.

In the meetings held with the NSUSC staff, it transpired that there was a view that the IT andweb design and management specialist will be developing the complete systems for NSUSC(Information Systems and website etc) himself. This is not possible within the resourcesallocated, not is it a requirement of the Terms of Reference. It was clarified to NSUSC thatthis input is meant to provide the necessary support to the staff to be hired by the NSUSCitself to carry out development of the systems. However, it needs to be further clarified to theNSUSC that they need to hire staff for developing the IT systems.

3.4.1 Requirements of Information Systems of NSUSC

NSUSC has at its mandate, development of a number of IT tools for management of itsoperations. These include the following:

1. NSUSC corporate website (http://www.nsusc.org.pk)2. Financial Management Information System (FMIS)3. Human Resource Management Information System (HRMIS)4. Asset Management System (AMS)5. Complaint Management System (CMS)6. Consumer Database7. Geographic Information System (GIS)8. Implementation of Microsoft Office SharePoint

NSUSC staff envisages developing these systems in three phases. In the short term, corporatewebsite of NSUSC and its complaint management system will be developed. NSUSC has

been given some templates by the IT specialist in this regard. LAN of NSUSC will also beestablished during this short term period.

During the mid-term, NSUSC will start working on the remaining systems and will completesome modules of the MIS. In the longer-term, development of the remaining modules of thesystems will be completed.

3.4.2 Resource Capacity of NSUSC for Developing and Maintaining IT Systems

Human Resources

As described above, NSUSC envisaged that the IT specialist will be developing these systemshimself. After having clarified this, it is noted that at present, NSUSC does not have any staffeither for information system development and operation, or for development and operation


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of the geographic information system. The NSUSC needs to hire this staff immediately sothat their mandate of developing these information systems is fulfilled in the time period theyhave. An attempt has been made to assess the requirements of IT for NSUSC and is presentedin Table 3-1 and Table 3-2 as follows:

Table 3-1: Staff requirement for development of GIS

Sr.

No.Name of Post No. of Posts

1 GIS Manager / Expert (Male/Female) 1

2 GIS Specialist (Male/Female) 2

3 GIS Analyst (Male/Female) 2

4 GIS Programmer (Male/Female) 2

5 GIS Associate / Digitizer (Male/Female) 6

6 Field Surveyor (Male) 12

Table 3-2: Staff requirement for development of Information Systems

Sr.

No.Name of Post No. of Posts

1 MIS Programmer (Male/Female) 5

2 Network Administrator (Male/Female) 1

3 Data Entry Operator (Male/Female) 16

A detailed description of the required experience and qualifications is explained in Annex3-4.

Hardware and Software Requi rements

NSUSC has already purchased some new systems and has installed LAN in their office. Butthey have used CAT5 cables and unmanaged switch for their network which is not

recommended due to heavy amount of unnecessary windows upload which then hangs thenetwork.

NSUSC needs to purchase new systems for the development of information systems and GIS.A detailed description of the requirement analysis of the hardware and software has beenundertaken and is attached as Annex 3-5. Detailed specification of hardware has been given inthe Annex 3-6.

3.4.3 Website Development of NSUSC

Upon the request of the NSUSC, GHK has also started development of the website forNSUSC. We are building on the initial version of the NSUSC that has been developed

through in-house resources.


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Photo: Website template (1 of 2)

Photo: Website template (2 of 2)


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3.5 Geographic Information System

A number of meetings and discussions were held to gather requirements from NSUSC for theGIS development, and to understand the data that would be prepared by consultants, andwould be helpful for use in the GIS. The meetings focused on required information for the

development of GIS and on ideas of what information will be available through GIS and howto make it useful, and in particular for the different operations of NSUSC.

Photo: Proposed GIS application

Meetings were also held with the SCIP-4 consultants Posche & Partners on what data will beprovided by Posche & Partners (P&P) for mapping and how it would be helpful in producingthe GIS applications and maps. They will be surveying to prepare maps and drawings for allsix of the TMAs. In some parts of the TMA, they will produce house-level drawings. P&Pare to prepare a Mapping Report within 3 Months of commencement of the assignment,which should thus be ready by the end of June 2010. Most of their work will be in AutoCAD.AutoCAD drawings can easily be imported into the GIS using filters available in the GISSoftware. The data required for GIS development that is not within the mandate of Posch &

Partners, will be gathered by the NSUSC survey teams.

It is also found that a very small amount of information is already available in digital orprinted format. Some departments and TMAs have the information but they may not bewilling to share information, or they just dont bother as the information cannot be easilyfound as it is very much scattered and disorganised: in loose papers or placed on dustyshelves. ER solutions and JERS have produced some drawings that may be useful in GISdevelopment, but they contain limited information. Figure 3-2 presents the conceptual designof the GIS to be developed for NSUSC.

During a visit to Khairpur TMA, Union council boundaries of the City of Khairpur weremarked on maps. Figure 3.2 presents the conceptual design of the GIS to be developed for

NSUSC


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Figure 3-2: Conceptual Design of GID System

3.6 Communication, Awareness Raising and Advocacy

Though the target audience at large is aware of the fact that six municipalities of North Sindhregion have been corporatized under NSUSC, the majority of informed stakeholders includingmedia, civil society and many of the political parties are unacquainted with the benefits ofprogram. Keeping in mind the volatile nature of public opinion in the area in relation toaccess to services and service provision, the benefits of the program need to be advocated andcommunicated in a very well-organized manner.

Following a review of the relevant documents and literature by the public awarenessconsultant, it is clear that a lot of work needs to be done with regard to the communication ofpositive messages, and awareness raising among stakeholders of teh role, activities andbenefits of NSUSC. Despite the fact that services of the Khairpur Taluka MunicipalAdministration (TMA) has been handed over to NSUSC to start the implementation process,achievements are currently not being appropriately posted at the company website, or throughother means of communication.

It is also unclear from the documents available, what the budgetary allocation is from NSUSCfor communication and advocacy initiatives and activities. Considering the importance of thiscomponent, these ambiguities need to be addressed at earliest possible time.

Although there is no scientific evidence available to determine the exact public perceptionabout urban municipal services being offered through NSUSC, it is clear that the pastunremittingly poor governance and management of urban services, and poor service delivery,

has forced consumers to distrust on any new concept in public delivery system. It is notedthat there have been sporadic insertions appearing in the media through the personal efforts of


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NSUSC management and staff. This effort is commendable, although a more structured andorganized approach is required to formally interact with end consumers and beneficiaries,media and civil society.

Despite all its weaknesses, both the media and civil society in Sindh has been very vibrantand vocal in the past on service delivery issues, and has been effective in proactivelyhighlighting issues of public importance. Taking advantage of the group's strength, there is anopportunity to involve civil society and media in meeting set NSUSC objectives. Keeping inview the politically active nature of consumers in Sindh, there is apprehension that yetanother poor delivery by a public entity may create disrepute for the company in its infancy.The communication, awareness raising and advocacy program needs to address this concernquickly and effectively. Comprehensive publicity plan of achievements and benefits ofNSUSC, rigorous awareness raising and advocacy campaigns, regular communication withstakeholders in decision making processes and access to information should ensure smoothrunning of the program and a positive image for NSUSC.

At the same time, there is also a need to design and carry out training and capacity building

plans in communications and awareness, and how to deal with the interface between NSUSCand the public for NSUSC management and staff, local media and civil societyrepresentatives.

Advertisement and publicity, awareness raising and advocacy initiatives require financial andhuman resources. Availability of financial and human resources needs to be ensured as soonas possible. There is a need to establish a full-fledged Communication and Advocacy sectionat NSUSC at the earliest possible time.

If not already carried out, a small scale public perception survey along with a communicationaudit needs to be carried out before planning and executing communication, awareness raisingand advocacy campaigns.

As a sole opportunity for NSUSC audience to access information, achievements and progress,a website has been designed and its development commenced. A quick visit of the NSUSCwebsite suggests the need for review with a communication perspective for furtherimprovement, with an aim to make it a more interactive and accessible source of informationfor a wider audience. The communications and IT team members will work together on this.

Internal communication is also an unavoidable requirement to meet the set NSUSC targets.Following an improvised evaluation of existing internal communication mechanisms,recommendations will be made for effective internal communication among NSUSCmanagement and staff in all six participating cities of the program.

3.7 Ensuring SCIP-2 services provide the best value for money to NSUSC

Since we started work on 14 February 2010, eight of our consultants have spent a total ofabout 3 months working on the SCIP-2 project. Our experience to date indicates that we canbest support NSUSC by:

Responding to needs and Delivering Outputs: NSUSC needs support on many issues andto varying degrees. Sometimes considerable support is needed, sometimes only peer review.We can best support NSUSC by helping the management team identify its needs for supportand responding to this need within the limits of our teams ability and their time available.Sometimes, the best way we can help is by doing the job and presenting the result to NSUSC

for review, for example, drafting a memorandum of understanding between NSUSC, SCIPand Khairpur TMA on the dispute between the TMA and its electricity supplier, the


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Hyderabad Electricity Supply Company (HESCO). This approach requires considerable timeinput. As a general rule, tasks which are outside the everyday operations of a water utility andonly need to be done once are most likely to be dealt with in this manner.

Working Together: Other tasks are best dealt with by working together; for example,developing the financial reporting and accounting system. Another example of this level ofinput is on tasks which are best undertaken by a third party specialist, for example, theprogramming of the geographic information system (GIS). For such tasks, we will work withthe appropriate staff of NSUSC to develop terms of reference, support procurement and helpoversee the work undertaken by the specialist contractors. This should have the added benefitof providing on-the-job training.

Peer Review: Finally, other tasks can be mostly undertaken by NSUSC and our support canbe limited to peer review. This sort of support requires the least input. As NSUSC gainscapability, most routine management and operational tasks should fall into this category.

Output Review: There is also a significant amount work associated with assisting NSUSC

with the review of outputs for other consultancies, and particularly the design consultancybeing undertaken by P&P under SCIP-4. This covers assistance with review of feasibilitystudies, designs, contract documents and safeguards documents.

As our overall inputs are constrained by the project budget, we will: (i) try to respond toparticular requests for support; and (ii) work with NSUSC senior management to determinethe manner in which we support NSUSC on a task by task basis, with the objective ofproviding, overall, best value for money.

Another area where we believe we can dramatically increase value for money for NSUSC isto undertake certain tasks outside Sukkur when this allows us to:

1. Ensure continuity of support (tasks commenced during a visit are not dropped upondeparture from Sukkur, to be resumed on a subsequent visit, but are completedimmediately having left Sukkur, at the home base)

2. Increase the responsiveness of support (allowing requests for support on certain issues tobe dealt with quickly from wherever the appropriate consultant might be located at thetime). This would particularly apply to specific tasks required by NSUSC (such as theproduction of certain documents, procedures, notes or memoranda); or where the reviewof a document or an output from another consultancy is required.

3. Provide better value for money for NSUSC. The activities under the contract provide abroad range of tasks, many of which are quite specific and relatively short in duration.While we need to avoid team members spending long periods of time in Sukkur whenthere is little support work to be done, we also need to be aware of the very limited travel

budget. The ability to perform tasks requiring only a few days on input which can beaccomplished at home office without incurring travel costs to and from Sukkur willconserve project budget (better outcomes and/or at lower cost).

4. There may on occasion be a need for work to be discharged in Karachi which is where; (i)the Provincial Government (ii) the PSU and (iii) the consultants for SCIP-1, SCIP-3 andSCIP-5 are based.

We suggest the following approach is adopted to the contract, and work carried out under thecontract:

1. All work to be taken in Sukkur unless otherwise agreed in advance, on a case-by-casebasis, by NSUSC and GHK


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2. Work can be undertaken outside Sukkur when the NSUSC and GHK agree that it isdesirable to do so based on the objectives set out above or for other reasons, such as theunavailability of the consultant to travel to Sukkur at the time when the input is required.

We suggest that the process would be an exchange of communications (generally through e-mail) explaining:

1. Why some work should be done outside Sukkur, justified against one of the threeobjectives listed above, or other legitimate reasons.

2. Agreement to the likely scope, timing and inputs required for the work and the process tobe followed if adjustments are necessary.

Consultants, time sheets submitted with invoices should indicate where work is undertakenoutside Sukkur, and indicate the tasks undertaken.

We recommend that NSUSC and GHK sign a letter or amendment to our contract to allow usto work outside Sukkur as outlined above.


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(NSUSC)SCIP 2

Section 4

Facilities Provided by the Client



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Facilities Provided by the Client


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4.0 Facilities Provided by the Client

It is understood that it is the intention that a separate office will be established close tothe existing NSUSC office for use of the consultants. This office has yet to beestablished and made operational, and in the meantime the team is sharing facilities in

the main NSUSC office with NSUSC staff. As the NSUSC office itself is still beingmade entirely operational, there are a number of additional facilities which arenecessary to ensure that the team are able to carry out their tasks as effectively as

possible. We would at this stage particularly highlight the following:

Generator: The electricity generator has been promised by the NSUSC but still hasnot been provided, as a result there are frequent and long periods when there is noelectrical power available in the office. The unavailability of electricity severelyaffects the ability of the team to work efficiently, and thus compromises work

productivity. It will be beneficial therefore if NSUSC could expedite the process ofproviding generator in the office.

Printers and Scanners: Access to printers, scanners and other peripherals has not beenmade readily available to team members so far. It will be useful and improve the productivityand efficiency of the tem if free access

DraftInceptionReport-(endMay2010)-11

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