**5.1 Clustering**

Rödl & Partner, the consultancy which performs the benchmarking for several German *Bundesländer* and which provided the data for calculating the efficiencies, has been clustering all participating companies according to the annual accounted water. In workshops with water supply companies they agreed to form three groups. The first cluster comprises 38 companies with a water delivery of 500,000 m³ annually, the second one comprises 97 companies with water delivery between 500,000 m³ and 2,500,000 m³ and for the last one, all remaining companies with annual water delivery up to 50,000,000 m³ (61 companies).

Such a differentiation, according to the size of companies, is extremely important. Our models will later reveal that the production functions of the three different groups vary. Thus, a data set should always contain enough observations in order to be able to form groups.
