Data Envelopment Analysis for Assessing Efficiency in Public Utilities with a Focus on Water and Sewerage Services

Amra Gadžo (), Benina Veledar and Alma Osmanovic Ðakovic
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Amra Gadžo: University of Tuzla, Tuzla, Bosnia and Herzegovina
Benina Veledar: University of Sarajevo, Sarajevo, Bosnia and Herzegovina
Alma Osmanovic Ðakovic: High School of Transport Tuzla, Tuzla, Bosnia and Herzegovina

Interdisciplinary Description of Complex Systems - scientific journal, 2024, vol. 22, issue 4, 497-509

Abstract: This article aims to demonstrate that the Data Envelopment Analysis method can be employed to evaluate the operational efficiency of public utility enterprises under state ownership or local government jurisdiction, such as cities and municipalities. These enterprises are tasked with delivering high-quality public services to citizens at affordable prices. Achieving this goal necessitates efficient management and judicious use of public resources. The research evaluated the efficiency of public water utility enterprises in the Federation of Bosnia and Herzegovina using the Data Envelopment Analysis method. Three indicators were used as inputs in the model: asset value, number of employees, and total expenses. The output indicator was total revenue, which reflects the number of users under relatively uniform service tariffs. The findings reveal that 92.31 percent of these public utilities exhibit technical efficiency levels above 90 percent. Additionally, 53.85 percent demonstrate 100 percent technical efficiency in input utilisation. The results highlight enterprises that inefficiently use assets incur above-average costs or employ more workers than necessary. The study concludes that the Data Envelopment Analysis model effectively identifies state-owned public utility enterprises that consume above-average resources to deliver the same scope and quality of services.

Keywords: data envelopment analysis; resource efficiency measurement; public utility companies; public water supply and sanitation companies (search for similar items in EconPapers)
JEL-codes: M40 M48 (search for similar items in EconPapers)
Date: 2024
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