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Organization Analysis

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POSSRATIONALITY Water is essential in our everyday life. It is a necessity which must be supplied to each one accordingly. Manila Water Company Incorporation is one of the suppliers of water in Metro Manila being such; it is relevant to study, furthermore to analyze the process on how the company renders service to its customers.

VISION/PHILOSOPHY * The entire organization is dedicated to observing the highest standards of corporate governance in order to serve the best interests of the investing public. The board of directors, management, employees and shareholders of Manila Water believe that sound and effective leadership is fundamental to the company’s continued success and stability. These principles and practices enable the company to create and sustain increased value for all its shareholders. * To become a leader in the provision of water, wastewater, and other environmental services which will empower people, protect the environment, and enhance sustainable development.

CORE VALUES
These include Integrity of the person, dignity of work, pride in excellence, concern for others and commitment to national development. * Integrity and Primacy of Persons We are a company of professionals whose unique roles and individual contributions towards corporate goals provide us with concrete opportunities to develop character and purpose in personal lives.

* Dignity of Work Our Company engenders in us a sense of pride and satisfaction in the fruits of our talents and efforts, which we place at Manila Water’s service, as part of a dynamic and well-knit team.

* Pride in Excellence We strive for excellence because turning out the highest quality products and services is the most fitting tribute to our customers and to society at large, to our company, to our colleagues and to ourselves.

* Concern for Others We support “people” and “non-government” organizations which link needs with resources in the unending work of social development.

* Commitment to National Development Manila Water places a premium on loyalty, not only in our relationships and responsibilities, but also to our roots which are the social and civic ground that has nourished and strengthened our enterprise. We purposely translate our commitment to national development into corporate vision and business venture
Organization’s Background
The water distribution network in Metro Manila before 1997 was in bad shape. There were numerous unregistered connections tapped to the city's aging mainlines. Water supply for the growing metropolis was spotty – only a few areas actually experienced 24-hour access to water. And leaks were all over the place.
This situation prompted the Philippine government to enact the National Water Crisis Act in 1995, designed to address the burgeoning population's need for improved water services.
The pragmatic solution was to turn over operation of the network to the private sector. Thus, under a 25-year concession agreement that started in August 1997, the Ayala-led Manila Water Company became the agent and contractor of the government-owned Metropolitan Waterworks and Sewerage System for Metro Manila’s East Zone. The concession agreement also granted Manila Water exclusive rights to the use of land and facilities for the production, treatment and distribution of water, as well as rights to operate the sewerage system.
The East Zone is home to some five million people. It comprises the cities of Makati, Pasig, Mandaluyong, Marikina, most parts of Quezon City, some parts of Manila, and the municipalities of San Juan, Taguig, and Pateros. It also covers cities and municipalities in the Rizal province further east of Metro Manila.

Transformation Process
Taking on the rehabilitation of a largely dilapidated network was a tremendous task. The first five years were far from smooth sailing as the company was besieged with both internal and external challenges. These problems included a currency crisis in 1997, the El Niño phenomenon in 1998, an arduous arbitration process a little after that, and a myriad of political uncertainties on the national front that increased regulatory pressure on the company.
To ensure the survival of Manila Water, the company's management realized that the process of transformation must begin internally - through its people.
Almost 90 percent of Manila Water's workforce is composed of former MWSS employees. They were a key driving force that brought success to the privatization endeavor. With proper training and motivation, the company was able to bring out the best from its employees whose talent and skills had been honed through many years of dedicated service to the MWSS, and now, to Manila Water.
Empowerment was a crucial element in the transformation. While the top management provided general policies and strategic directions, mid-level managers were given a free hand to plan and implement changes in their respective territories. Skilled workers were transformed into knowledge workers. Cross-functional teams called "clusters" were formed in order to assist the management in formulating key policies and decisions as it focused on certain corporate issues.

Achievements
Today, Manila Water stands proud as a shining example of a successful public-private sector partnership. Among its most notable achievements since 1997 are as follows: * Reduction in water losses (non-revenue water) from 63% to 23.9% as of December 2007 * Increase in the number of customers by two million, so that the total population served exceeds five million * Increase in the percentage of customers enjoying 24-hour water availability from 26% in 1997 to 99% as of end 2007 * Increase in the volume of water delivered to customers from 440 million liters to over 1 billion liters per day by December 2007 * 100 percent compliance with water quality standards * Increase in the number of "Water for the Poor" Program beneficiaries from 1 million people in 2006 to 1.3 million in 2007 * Growth of capital investments from 17.5 to 23 billion (Current figure to be provided by Client) * Reaching a net income of P2.42 billion for 2007

STRATEGY-BASED PROGRAMS * Tubig Para sa Barangay (Water for Local Communities) benefiting 1.5 million people * GPOBA Programs 53,000 people benefited from GPOBA * Kabuhayan Para sa Barangay (Livelihood Program) P24 Million worth of jobs generated * Other Lingap (We Care) Projects benefiting one million people

CUSTOMIZED ENVIRONMENTAL PROGRAMS * Finalized the Company’s carbon footprint * Started climate change awareness campaignswith employees as the main audience * Trained selected Facility Managers onSustainable Consumption and Production

Manila Water has successfully completed the rehabilitation of the wastewater treatment plant located in Magallañes (south of Makati City), which processes up to 40 million liters of wastewater per day. It has also constructed 31 package sewage treatment plants all over Metro Manila and continues to offer free desludging services to customers in its territory as part of its community service.
All these were achieved through massive capital investments totaling P27 billion to date. Over the years, more than 1,300 kilometers of new pipelines have been laid out in various areas to improve service delivery and minimize water losses. Most of the existing pipelines in the system are scheduled to be replaced in various stages.
One of the company's most notable achievements is its remarkable financial performance. 2001 was the first year that the company was able to turn in a favorable net profit. In 2003, the company doubled its net income to P1.2 billion compared to the previous year's P558 million. Its financial record allowed the company to secure favorable financing terms from international financial institutions such as the DEG (German Development Bank) and the International Finance Corporation.
The company maintained a steady growth in 2008, with its net income registering at P2.78 billion.

PRODUCTS AND SERVICES
Manila Water provides water services to more than 1 million households in the East Concession area through more than 680,000 water service connections and 51,000 sewer service connections. More significantly, of the more than five million people connected to the water network, 1.5 million people or about 230,000 households belong to the low-income communities.
At Manila Water, we do our best to provide our customers with service that is business-like in its efficiency, yet personal in its delivery. We have adopted a decentralized structure that enables us to be more in touch with our customers, giving us the opportunity to identify and address individual needs faster and better.

FACILITIES AND PROCESSES
Manila Water makes raw water potable through its water treatment plants. This potable water is then delivered to customers through a distribution system made up of a network of pipes and pumping stations. Afterwards, the water used by customers is treated in the company’s wastewater treatment plants before being discharged to rivers and other water bodies.

ECONOMIC CONDITION
When the Philippine government awarded Manila Water a 25-year concession contract in 1997, the existing government-owned utility, MWSS, provided water to only about 60 percent of households in its service area, home to 5 million people. The poor (about 40 percent of the population) were disproportionately underserved. Service was characterized by low water pressure and intermittent supply. MWSS had the highest rate of water loss among major cities in Asia. Twothirds of the water it produced was lost because of leaks or illegal tapping. Studies showed that Manila would soon face serious water-supply shortages if nothing was done to correct operational inefficiency and years of insufficient investment. Manila Water also faced significant external challenges to its operational performance, including the Asian financial crisis of 1997 and a severe drought caused by El Niño in 1998.

SUSTAINING THE ENVIRONMENT

2008 is also a significant year for Manila Water’s environmental initiatives. This year marked the establishment of the Environmental Management System (EMS) for four of the Company’s facilities chosen for the pilot project. The EMS helped the facility owners identify the environmental gaps in their operations, and formulate specific action plans to address such gaps, which include chemical optimization as well as power and fuel efficiency.
Other projects related to the Climate Change program include the watershed management initiative in partnership with Bantay Kalikasan, a non-government organization committed to environmental protection. The Company is also focusing on the reforestation of the heavily denuded Ipo Dam watershed, while completing the reforestation of the La Mesa Watershed.
For the wastewater program, Manila Water has started its cleanup of the Marikina, Pasig and San Juan rivers via the introduction of combined sewer-drainage systems.
Manila Water’s Waste–to–Energy program is likewise nearing completion. A plant is currently being constructed within the Magallanes Wastewater Treatment Plant compound, and once the facility is operational, it will harness methane gas emitted during the sewage treatment process and convert the same to electricity. The power to be generated is expected to be sufficient to run the entire plant.
In 2008, the UP Sewage Treatment Plant was chosen for the implementation of the first ever treated wastewater effluent reuse system and started providing four million liters per day of recycled water to the UP-Ayala Land Techno Hub located adjacent to the facility. The gray water is being used for flushing toilets and watering the lawns of the park, thus making more water available for drinking purposes.
Forming alliances with government and NGOs to protect upstream water resources, Manila Water is involved in reforestation efforts and livelihood programs for illegal residents, whose presence in the watershed area historically has contributed to erosion and pollution, threatening the raw water supply.
The company also launched a pilot program to use sludge from wastewater treatment plants to reclaim soil in areas rendered no arable by ash from the eruption of Mount Pinatubo.

CLIMATE CHANGE POLICY
Manila Water will: * Develop and implement a Carbon Management Plan. * Continue to improve efficiency in energy consumption and increase use of energy from sustainable sources (e.g. set up waste-to-energy projects at wastewater plants). * Consider the impact of climate change in our operations - medium and long term - and put in place mitigating measures (e.g. New Water Resources). * Continue to plant trees to protect watersheds in order to combat the effects of Global Warming.

CUSTOMER SERVICE
One of Manila Water’s new corporate values is customer service, exemplified by its monthly “customer care day.” Each month every employee, from CEO Antonio “Tony” Aquino to the meter readers and leak repair crewmen, “walk the line” by going house to house to visit customers. Employees assess firsthand how the company’s services affect customers, particularly those living in informal settlements. This interaction with customers, increases employees’ knowledge, enriches their work experience, and builds customer loyalty and goodwill. Manila Water’s engagement of employees and customers, along with efficient operational management, earns it an impressive track record of service and profitability.

COMPETITION
Five years after the winning bids to privatize Manila’s water promised to effectively cut Manila water tariffs in half, increase connections to provide for millions of thirsty residents, improve infrastructure to the tune of $7.5 billion, and reduce non-revenue water (water lost as a result of leakage and illegal connections) by 32 percent to save the city $4 billion over 25 years, privatization in the Philippines has proven to be an unmitigated disaster.
In 1997, the World Bank and the Asian Development Bank succeeded in sponsoring the privatization of Metro Manila’s water and sewage system, granting two 25 year concession contracts to two different groups. At the time, only 75 percent of Manila’s 11 million residents had household water connections, and the public enterprise, Metropolitan Waterworks and Sewage Systems (MWSS), was hugely inefficient, corrupt, and unpopular. The system was in disarray, and Filipinos were eager for improvement of water service by any means. As only the International Financial Institutions were capable of funding the development of the water sector, a policy of privatization was aggressively pushed and instituted. The winning privatization scheme split Manila’s water sector into two sections. The western part of the city was given over to Maynilad Water, owned by a subsidiary of the huge French water corporation Suez and by the oligarchic Philippine Lopez family. The eastern part of the city was contracted to Manila Water, owned by the notorious American corporate giant Bechtel and the oligarchic Philippine Ayala family.
Initial reports of the privatization were favorable. Service improved, connections increased, and tariffs dropped. However, many pundits took issue with the calculations and contexts which produced these conclusions. The private companies used a formula which multiplied one connection by 9.2 (a number created by a French consultancy firm during contract negotiations) to estimate service coverage. MWSS responded that such claims were exaggerated and did not correspond to established census figures.
In December 2002, after being denied permission to raise rates (the only denial after several approvals), Maynilad pulled out of it privatization contract. Far from bringing about the efficiency promised by privatization experts and advocates, Maynilad’s operations proved extraordinarily inefficient. The private company agreed to exorbitant consultancy fees and payments for firms associated with the Lopez family and the Suez corporation, severely under-spent on infrastructure, ignored regulators, failed to absorb financial obligations from MWSS, and misrepresented the impact of the Asian financial crisis on their loan financing. Rather than express contrition to the water consumers that Maynilad had abandoned or just run for cover, the company turned around and promptly sued the Philippine government for over $300 million.

TECHNOLOGY When Manila Water took over the operations of the state-owned Metropolitan Waterworks and Sewerage System (MWSS) in the Metro Manila's East Zone in 1997, the water network system was poorly managed and very inefficient. The network had deteriorated lines, illegal connections were widespread, and nonrevenue water (NRW) was at a high 63%. Manila Water realized early on that the effective management of NRW is crucial to the goal of serving more people. Less water losses meant more water to be supplied to more people. The product of this realization is Manila Water's multipronged NRW reduction strategy. Chart 1: Manila Water executed major capital programs amounting to P19 billion to replace and rehabilitate over 1,440 km of pipelines | Manila Water also realized that an efficient supply and pressure management system, as well as a massive pipe replacement program, are necessary to address the high NRW level they inherited upon taking over the system. Old asbestos cement pipes, and galvanized iron and cast iron pipes, which were prone to leaks and breakage, were replaced. The structure of primary water lines was also strengthened to eliminate further losses, starting in areas with high occurrences of leaks and pipe bursts, and areas prone to dirty water incidences. Since 1997, Manila Water has invested a total of PhP19 billion to rehabilitate and replace over 1,440 kilometers of pipes.
In 2004, the concept of "Zero NRW DMAs" was introduced. A zero NRW DMA means that the DMA registers very minimal water losses. Major pipe-laying and pipe-replacement activities were done in priority DMAs. Furthermore, isolation and control valves were installed to make the areas easier to manage and monitor. Manila Water currently has 507 zero NRW DMAs, and the company is doing its best so that its NRW level comes at par with the more efficient cities in Asia. Manila Water also recognized that having a centralized system, with 97% of treated water delivered to customers through an intricate network of pipelines, is prone to risks and can compromise the system's efficiency. Decentralization of the distribution system began realigning existing water mainlines. Other programs which contributed to the significant drop in NRW include * Cleaning up and closing all abandoned service pipes and mainlines * Replacing and reconditioning defective and inaccurate water meters * Rehabilitating old and rusted service pipes * Installing Pressure Reducing Valves to adjust water pressure and prevent pipe bursts

SWOT ANALYSIS
STRENGTHS
1. The Manila Water’s workforce composed of the former MWSS employees w/c brought success to the privatization endeavor.
2. Manila Water does their best to provide their customers with service that is business – like its efficiency, yet personal in its delivery.
3. Manila Water rises from low standards or quality service. They grew as time pas. They are not getting tired giving more service for their client.
4. Manila Water supplies sanitize water to its customers.
5. Manila Water provides clean water as well as takes care of its environment.

WEAKNESSES
1. Having lack of supplies to other places because of the leaks and illegal toppings.
2. Insufficient programmed water level.
3.
4.
5.

OPPORTUNITIES
1. The Manila Water attained great notable achievements since the transformation began. These make them crow of and gained suitable confidence.
2. Through massive capital investments over the years, service delivery were improved and water loses was minimized.
3. Forming alliances with government and NGO’s and being involved in reforestation efforts and livelihood programs for illegal residents.
4. The company’s financial record allowed it to secure favorable financing terms from international financial institutions.
5. Establishment of the Environmental Management system helped the facility owners identify the environmental gaps in their operations and formulate specific action plans.
THREATS
1. Severe drought caused by El Niño.
2. The company was besieged with both internal and external challenges – a tremendous task that brought pressure and challenge to it.
3. Flood can contaminate pipelines.
4. Earthquake or some calamities can destroy service pipes.
5.

NEW MISSION We the company and the staff will maintain the quality service. We will also improve these quality services to meet the satisfaction of our customers without damaging our environment.

PRIMARY SET OF ACTIONS
1. Promote cooperation with our stakeholders.
2. Improve the quality of life in the communities we serve by supplying them safe and clean water.
3. Revitalize the economy by being a strong partner in nation-building.
4. Campaign for the conservation of our natural resources.
5. Develop service lines for clean water and safe from calamities.

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