Guide to Hydrological Practices, 6th edition, Volume II - Hydrology.nl

CHAPTER 2. HYDROLOGICAL SERVICESII.2-11be managed in a structured way, possibly bypreparing a training plan for the Service or forindividual staff members. It should correspond totraining needs analyses that are part of the performanceappraisal process. These analyses may also becarried out independently, for example, whenmanagers are considering new procedures, productsor services, organizational restructuring orsome other response to the changing businessenvironment, and when there is a need to matchcurrent competence with that of the past.2.5 FINANCIAL AND ASSETMANAGEMENT [HOMS A00]Financial management has become a basic aspect ofa director’s work, as governments worldwide imposemore stringent financial disciplines. Normally,financial management procedures are defined by aHydrological Service’s parent organization, and thedirector and/or selected management staff receiveappropriate training in these procedures. Nevertheless,a director should make every effort todevelop a much more sophisticated grasp of financialmanagement than the basic minimum.Accounting procedures in the public sector are generallyprescribed by government and a HydrologicalService that is part of a government department orState-owned enterprise will have to follow thesescrupulously. This is to ensure transparency andaccountability, that is, to make sure that the Service’sfinancial accounts are clear and comprehensible,resources are spent for the designated purpose,responsibilities for financial transactions can beidentified and funds are not siphoned off throughcorruption – unfortunately a fact of life in developedas well as developing countries.2.5.1 Sources of revenueA major concern of managers of a HydrologicalService – indeed, of any organization – is the sourceof income or revenue required to maintain theService’s operations and assets. In most countries,the government has been and will continue to bethe predominant source.The recent trend worldwide is for governments torequire or enable public sector agencies to findsources of commercial revenue in addition to allocationsfrom the national budget. Some Serviceshave made significant progress in identifying nongovernmentalclients or willing clients within thepublic sector. Value-added products and services arethe most profitable. A Service should focus itsenergy on seeking new sources of revenue only inareas that are consistent with its primary mandateand where a good, that is, profitable, business casecan be made.Commercial work requires a legal mandate, and themanagers of Hydrological Services that engage incommercial activities should be familiar withnational laws and regulations relating to commerce.In most countries, there are relatively few nongovernmentalclients for value-added products thatare potential sources of considerable commercialrevenue. This is especially the case in developingcountries where the pressure on a HydrologicalService to find supplementary sources of revenue isalso likely to be greatest. Most of the products andservices of a Hydrological Service, and the databasesand other assets that are needed to provide thoseproducts and services, are, however, public goodsfor which the government is the logical purchaser.A Hydrological Service may nevertheless be requiredto recover some of the costs of its public servicesand products.Economic theory indicates that the appropriateapproach to cost recovery is to charge for the directand associated overhead costs of providing theproduct or service, including the administrativecost of recovering costs, as well as depreciation ofthe assets used. Where the product or service uses ahydrological database or other asset provided atpublic expense, it is economically inefficient toattempt to charge part of the cost of providing thatasset. Potential clients strongly object to suchcharges and refuse to use the service at all. Thisresults in underutilization of the public asset, theuse of inferior alternatives such as guesswork andhence economic inefficiency. The experience ofHydrological Services that have attempted to chargefor data generally confirms this. Increasingly, it isregarded as preferable to provide unrestricted publicaccess to data via the Internet at no charge. Thisreduces the cost of meeting data requests and canhelp enhance the Service’s reputation.As a means of imposing financial discipline andachieving maximum transparency, a governmentmay choose to administer funds in ways other thanmaking an allocation in the national budget. Theseinclude:(a) Providing funds through a non-governmentalorganization such as a National ResearchCouncil, which allocates funds on a competitivebasis and/or in terms of defined nationalneeds for information;