Performance measurement can be an effective tool in driving organization improvement to enable a utility to become more competitive, or improve customer satisfaction. Water Environment Research Foundation (WERF) Project #99-WWF-7,Developing and Implementing a Performance Measurement System, is developing performance measurement systems by investigating a number of best practices in other industries and implementing selected practices at various water/wastewaterutilities nationwide to determine how these practices can be adapted and applied. This joint WERF/AWWARF research project has been underway since mid-1999 to provide methods and tools that enable the utility to develop and implement aperformance measurement system based on a demonstrated, proven approach. The Volume I Report (WERF, 2000) summarizes the secondary research and project approach. Well-designed, properly implemented performance measurement systems can enable utilities to achieve new levels of performance in terms of efficiency, quality, and effectiveness. Interest in performance measurement is increasing in all competitive businesses and industries today, and has been advanced throughconcepts such as the Balanced Scorecard. Utilities can employ these same concepts and learn best practices from other industries' experiences. While a performance measurement system alone doesn't improve performance or make a utility competitive, when combined with an appropriate business strategy and performance improvement initiatives, it can drive a cycle of change. A successful performance measurement system combines a holistic approach around improved business practices and effective human/organizational strategies in addition to actual performance information for operational decision-making. Includes 6 references, figures.