Lila Thompson, chief executive of British Water, calls for a new culture of collaboration between utilities and suppliers.
Ofwat’s £88bn Draft Determinations of water company business plans, which were announced on 11 July present a huge opportunity for the water industry supply chain, and a major challenge across all fronts.
While customers in England and Wales have seen bills remain flat for three decades, in real terms, the needs of our water and wastewater network have grown significantly due to population growth, increased consumption and climate change, as well as ageing infrastructure.
This means that increased investment is very welcome, and absolutely essential if Ofwat’s ambitions for the long-term sustainability of the sector, along with improvements in customer service and environmental performance, are to be met.
To meet this vision, an effective and resilient ecosystem of key stakeholders needs to be established and maintained, where the supply chain can thrive and deliver the diverse and innovative range of technologies and solutions that will be required in AMP8 and beyond. As the lead organisation representing the supply chain in the UK, British Water is calling for the whole sector to step up and embrace change.
A culture of collaboration is required of all stakeholders, including consistent dialogue between water companies and the supply chain on project scope, optioneering, planning and delivery. This will help deliver certainty for supply chain companies if the much-needed skills and innovation are to be retained and developed to deliver benefits well into the future.
The stops and starts of the five-year investment cycle continue to act as a barrier to efficiency in the water sector as workers are hired, let go or reassigned to other sectors, meaning that skills and experience hemorrhage.
British Water has estimated that the impact of the asset management plan (AMP) cycle leads to lower productivity of around £600k per AMP, based on the cost of redundancy and rehiring staff and wasted operational costs this would mean an inefficiency of £4.8 billion if there are no changes in AMP 8.
Given the scale of investment and delivery earmarked for the sector and the tightening in recruitment across all sectors, water cannot continue in this vein.
AMP8 presents a much-needed opportunity for the sector to smooth out these peaks and troughs whilst ensuring that procurement processes are fit for purpose dependent on the size and type of contract awarded. The recommendations from our Supply Chain Task Force continue to be taken forward with a deep dive on what best practice procurement looks like. This project is being supported by KPMG and other key stakeholders across the industry and we expect to issue a white paper in the Autumn.
Following Ofwat’s £88bn Draft Determinations, British Water is seeking:
- An embedded culture of collaboration
- A balanced work profile over the whole 5 years
- Continued water company market engagement events to ensure the supply chain has as much visibility of project pipelines as possible
- Contract terms that do not pass down onerous risks to the supply chain
- A new Reg 31 testing facility
- Standardisation of solutions across water companies, and
- A faster adoption of innovation, roll out of successful trials and sharing of best practice
Water knows no borders, which means a disjointed approach to water management across England, Wales, Scotland, and Northern Ireland risks creating a patchwork of problems. We need a coordinated strategy to safeguard this vital resource.
A shared challenge requires a shared solution, which is why British Water encourages and facilitates collaboration between Government, regulators, and water companies and the supply chain across the UK, to help address these challenges.
In addition, the water sector in the UK and Ireland needs even greater diversity and inclusion to better reflect the communities it serves and to drive innovation and customer service.
Existing data highlights significant diversity gaps, especially in gender disparities and the lack of visible representation and role models at leadership levels. Yet, to meet the evolving challenges facing the UK water sector in the coming AMP, we need a diverse pool of talent and perspectives.
Embracing inclusion encourages innovation, ensures our workforce reflects the communities we serve, and ultimately leads to a more resilient and equitable water future.
In AMP8, organisations should focus on leadership representation, implementing Equality Diversity and Inclusion (EDI) programmes and training, recruitment processes, and retention strategies that deliver actual change.
When combined – new innovative technologies, greater diversity of thought, experience and opinion, and more collaborative ways of working will deliver multiple benefits in AMP8, not only for utilities and suppliers but also – crucially – for the environment and wider society.
British Water and its members stand ready to be a vital partner in these discussions and to contributing to positive change across the industry.
