ASSESMENT OF APPROACHES TO IMPROVE THE BUSINESS PERFORMANCE OF PDAM KOTA BANDUNG

• Main Author: Srikandiati (NIM : 25597027), Iriana
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/4799
• Institution: Institut Teknologi Bandung

<b>Abstract :</b><p align=\"justify\">The problem being faced by Perusahaan Daerah Air Minuet (PDAM) Kota Bandung is very complex, not only related to technology inefficiency, but also economical inefficiency and poor financial performance. The situation has induced the emergence of complex social problem, because the financial problems has diminished PDAMs capability to deal with equity problem related to access to clean water supply, that PDAM, being a public utility enterprise, has to undertake as its mandate. As a consequence of those unsunnountable problems, PDAM activity has become a high cost operation. Aside from those problems, the management of the enterprise is highly influenced by government bureaucracy, and decisions made by government on water sale tariff leads to water price level that is below the economic price of the produced water. Alltogether, the said problem has led the enterprise to experience low profit margins, and even negative profits, that causes the enterprise unable to satisfy its debt payment obligations, and to develop its business activities, and brings the enterprise to be at the brink of bancruptcy. <br /> <br /> To overcome the problem of PDAM\'s business failures, two approaches have to be undertaken simultaneuosly, i.e : (a) undertakings to overcome the weak financial position of the enterprise, and (b) undertakings to deal with the poor management of the enterprise. There are 4 alternatives that are identified to be suitable to deal with the financial aspects of the problem, namely : (a) liquidation, (b) debt restructuring under the supervision of a trustee, (c) voluntarily debt restructiuing, and (d) merging. To deal with the problems deriving from and related to poor management, 3 alternatives approaches can be considered, which are : (a) internal restructuring, (b) restructuring through partnership with private sector, and (c) divestiture. <br /> <br /> Upon reviewing the state and conditions of the financial, operational, restructuring, (b) internal restructuring, and (c) restructuring through partnership with private sector. And by considering all the efforts that have been done by PDAM so far, it can be said that restructuring through partnership with private sector is a possible alternative to solve the problem faced by PDAM Bandung. <br /> <br /> There are four possibilities of establishing partnership with the private sector, i.e : (a) Service Contracs, (b) Management Contracts, (c) Lease Contracts, and (d) Concession. Upon reviewing the PDAMs performance, the benefits of partnership, and precondition of implementing various forms of the partnership; management contracts is identified as most suitable forms to be applied. However it should be noted that the contract management arrangement can lead to organizational improvement only if two condition are fulfilled. These are (a) there should be clearly defined performance targets, and (b) sanctions against failures in delivery the targets are also clearly established. The most important areas where performance targets must be set and defined are : (a) maintainance and rehabilitation of distribution pipe and water meter, (b) water meter reading, (c) water bill collection, (d) training staff and technical development program, and (e) collecting information about services system. <br /> <br />