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It’s widely recognised that some of the toughest challenges faced by today’s water utilities are the ability to prove the resilience of their operations and reduce bills whilst still ensuring their customers are satisfied. Now that the details of Ofwat’s PR19 consultation are out, it’s clear that the nation’s water utilities and boards are going to be under more pressure than ever not only to pass muster, but to prove ‘exceptional’ performance. SEAMS and Olu Eriolu, Principal Consultant, Risk and Resilience at Arcadis, look at what can be done to keep stakeholders, the regulator, investors and the customer happy.

Ahead of PR19, Ofwat introduced a new rating of ‘exceptional’ for company business plans. Anyone wishing to achieve this new status in the initial assessment will need to prove genuine best practice and cross sector innovation in their approach to understanding and addressing risk and resilience. Not necessarily an easy thing to achieve, but the rewards could be huge – even by implementing processes and systems aimed at working towards exceptional. Securing this status not only boosts confidence on the part of customers, but also those in the investment community. Those looking for stable returns are infinitely more likely to be drawn to opportunities where risk is demonstrably well managed, and value is enhanced.

Take Severn Trent Water as an example of a company who is working towards outperformance. In statistics released last autumn, Severn Trent Water announced it had cut four million litres a day from its leakage figures, with a 21% reduction in supply interruption and leakages, and reducing total sewer floodings by 48%. At the same time, Severn Trent offers the lowest average combined bills in Britain to its customers – at under £1 a day. That’s £32 a year less than the next cheapest in England and Wales. This approach has led to STW being forecasted to attain approximately £50million in Outcome Delivery Incentives. Definitely showing that aiming for “exceptional” status is worth the investment.

A key means of achieving innovation and best practice is by looking broadly at business operations in line with resilience. Ofwat’s newly formed Task and Finish group has developed ten recommendations including the development of benchmarking, standards and metrics. Once risk is measured and understood, water utilities can use this information to address other recommendations, such as increasing public engagement and ensuring resilience measures are legitimately funded.

What about customer service?

It is an age-old problem, but all water utilities grapple with improving service while under pressure from the public and the government to reduce bills. Unsurprisingly, getting the balance right also features heavily in the consultation.

To truly make this work, investment must be targeted effectively and evidence needs to be given to support any claims made. Where inefficiencies are identified, money can be saved. Decision makers need to have greater evidence-based data, to enable them to meet the new PR19 goals. Innovation again is key to achieving this. The utilities and infrastructure sectors are one of the last to be digitally disrupted, and if they are to meet future customer and stakeholder demands, there is a need to move forward and embrace the latest developments in decision support technology.

Can ISO55000 help?

There’s an argument that ISO55000 is not seen as having a big impact on the way of working in the UK Water industry, due to existing levels of asset management maturity in our sector. Passing ISO55000 is a statement that an organisation is ‘competent’ – not necessarily exceptional. There’s a danger that achieving ISO 55000 accreditation can sometimes be used as an excuse to not embed decision analytics in an organisation. Corporately, organisations ought to set their goals well beyond ISO55000 and aim for asset management excellence, this will be more likely to pay back in benefits.

Best practice checklist

 1. Get more people involved in the process

  • Make it simple and repeatable
  • Have a consistent planning process across assets and departments
  • Transparent / auditable process which captures local decision making knowledge

 2. Speed up the process

Days and weeks not months

  • Making the process easier to do means asset planning is not a special event
  • Enables an organisation to respond quickly when things change

 3. Make best use of available data

  • Don’t wait for perfect data – measure data quality and use what you have
  • Relate decisions to data and understand uncertainty

Truly embracing data and understanding risk and resilience can have huge dividends – be it through bringing in greater investment or proving better value to customers. PR19 presents the water industry with a big opportunity to step up and keep all the customers happy – and the benefits are there for the taking.

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