Training Module 6 Business Planning for Small Water Systems

1. Training Module 6Business Planning for Small Water Systems Prepared by RCAP Solutions for the PA Department of Environmental Protection

2. Business Planning • This course is based on the DEP Public Drinking Water Supply System Business Plan Manual (June 1996).

3. Business Planning • Can anyone explain, in your own words, what a Business Plan is intended to show?

4. Business Planning • Required for any new water system applying for a construction permit • Recommended for all systems

5. Business Planning • Self-sustaining • Commitment • Capability

6. Business Planning • System strength • Best option available • Cost of adverse changes and their impacts on user fees

7. Business Planning • Any individual familiar with the system and its finances can prepare it • Assistance may be provided by county or regional planning agencies, the DEP, and non-profit organizations such as RCAP

8. Business Planning • Owner has ultimate responsibility!

9. Business Planning • First step • Business Planning Manual • Second Step • Planning Consultation Meeting

10. Business Planning • Third step • Draft Business Plan • Fourth Step • Preliminary Engineering Conference

11. Business Planning • Water supply needs • Alternatives • Structure • Viability

12. Business Planning • Facilities Plan • Management Plan • Financial Plan

13. The Facilities Plan • Potential System Requirements • Alternative(s) Identification and Evaluation

14. The Facilities Plan • Evaluating Alternatives • Cost estimates of each • Expected engineering costs • Construction cost estimates • Operating cost estimates • Preferred alternative

15. The Management Plan • Identify owners and operators of the system • Assure that the plan will be implemented by capable individuals and organizations • Include management, administration, operation and maintenance plans

16. The Financial Plan • Revenue sufficiency • Adequate capitalization • Ongoing financial capability • Rates and pro forma (predicted) financial statements for 5 years

17. Exercise • Take a few minutes to answer the questions in your workbooks • Any questions?

18. Financial Plan Example • Smallville Water Authority

19. Financial Plan Example • Financial Plan Form 2: Income, Expense, and Cash Flow Statement • Form 3: Balance Sheet • Assumptions and Criteria

20. Financial Plan Example • Purpose • Rate adjustments • Impact of construction on rate • Planning tool • Emergency fund • Capital replacement fund

21. Financial Plan Example • Income, Expense, and Cash Flow Statement in Appendix A • Operating Revenues and Expenses • Non-operating Revenues and Expenses • Taxes • Extraordinary Revenues and Expenses

22. Financial Plan Example • Balance Sheet in Appendix B • Assets • Liabilities • Fluid Equity

23. Financial Plan Example • Income, Expense and Cash Flow Statement • Current “snapshot” • Baseline for future rate adjustments

24. Financial Plan Example • Operating Revenues

25. Financial Plan Example • Operating Expenses

26. Financial Plan Example • Non-Operating Revenues

27. Financial Plan Example • Non-Operating Expenses

28. Financial Plan Example • Taxes

29. Financial Plan Example • Extraordinary Revenues

30. Financial Plan Example • Extraordinary Expenses

31. Financial Plan Example • Balance Sheet • “Snapshot” of assets and liabilities

32. Financial Plan Example • Assets

33. Financial Plan Example • Liabilities

34. Financial Plan Example • Fluid Equity

35. Exercise • Take a few minutes to answer the question in your workbooks • Any questions?

36. Summary • Key points

37. References • DEP- your regional office and regional water supply engineer as listed on page 26 of the manual or contact Dennis Lee of the DEP • Pennsylvania State Association of Township Supervisors • RCAP Solutions, Don Schwartz, PA/NJ Program Manager