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Auditor not impressed with City’s water billing operation

The clock is ticking on the expiry of the city’s contract with Alectra Utilities to handle water meter billing in the city, but a staff audit suggests the relationship was on the rocks anyway. The report says the city has had to make adjustments to the water bills of some of its major users up to nearly $2 Million. Electra has been doing the billing since 2001 but have notified the city they will not renew their contract after the end of 2024.

That gives the city and other municipalities who were also using Alectra less than 24 months to come up with a new plan. What is being contemplated is a hybrid system where the city will actually issue the bills and collect the payments, and the rest (i.e. Customer Information System, Customer Portal, Call Centre, Meter Reading and Bill Print services) will be outsourced to multiple vendors. They City has budgeted $10 million for the billing transition.

The report expressed concern that staff had outsourced most of the transitioning project to an outside consultant, Kaihen, with no dedicated city staff lead to oversee the consultant’s performance. In the words of the auditor, “weak contract management has been one of the most common findings we have identified in our audits in the past 12-18 months.” In the discussion at the Audit and Administration committee it was suggested that from the city’s perspective the project is being overseen  by managers “off the side of their desks,” in other words, nobody specifically charged with the job, and managers trying to squeeze the project in among other tasks. The auditor noted, “It is our opinion that this Project is complex and if not carefully managed, these costs could easily exceed this $10M initial budget. “

The other risk is that with Alectra preparing to exit the project, the city is vulnerable to performance issues during the transition period. The report says Alectra was not always compliant with some of the conditions of the original contract and as the auditor suggested, “there is a risk that the City may not be able to hold Alectra accountable to protect the integrity of its information given its history of noncompliance and making unilateral decisions.”

In terms of how the city had managed the relationship with Alectra the auditor brought in BDO who concluded there were several areas that needed improvement:

•              Lack of contractor performance management, including the establishment of mechanisms to rectify poor vendor performance.

•              The establishment of targets, baselines, outcomes, timelines, accountabilities as well as clear methods for collection and reporting for key program metrics.

•              Staff turnover at the supervisory and frontline levels.

•              Manual data transfer and reporting processes, which combined with staff turnover, has created a backlog in key operational reporting.

•              Gaps related to the root-cause analysis which indicates that the corrective and preventative actions identified by Hamilton Water are incomplete and therefore not fully effective in eliminating the risk of future large billing issues.

As is the case with these kinds of reports city management is provided an opportunity to comment which they did, largely agreeing with the recommendations of the auditor but to one suggestion, namely, “The City should implement a regular operational meeting attended by all relevant program stakeholders to ensure consistency and alignment of information and progress to support program oversight and delivery,” staff disagreed saying they meet often enough with key stakeholders now.

That led to a tense moment at committee as Clr. Brad Clark pushed back, saying staff should follow all of the advice given by the auditor. That led to a discussion that dragged in City Manager Janette Smith  who was asked who gets the final say when staff disagree with the city auditor. That led to a discussion of whether councillors, if they were to insist that staff agree with the auditor’s recommendations, might be straying into operational matters.

In the end the auditor  appears to trying to tell the committee that he sees a train wreck coming if this billing matter isn’t given more focused attention.

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