Delivering major ambitions in water: turning plans into action
As the water sector in England and Wales starts its new asset management period (AMP8), the focus is rightly moving from investment and funding proposals to deliverability. To meet the significant investment, a step change in outcome delivery performance is required to regain public trust.
Record investment levels of £104bn over the next five years have been agreed between UK water companies and regulator Ofwat. This will enhance environmental resilience, shore up water networks and meet growing demands from customers.
The demand and scrutiny on the industry is greater than ever. There’s widespread recognition that AMP8 cannot simply carry out ‘business as usual’ approaches. There must be a step change in delivery if we’re to meet the investment being made.
This needs focus on three key areas: changing perceptions and attracting the best talent, working smarter, and expanding and enhancing cross-sector collaboration.
Changing perceptions and attracting the best talent
It’s important to put the challenges the industry faces in a global context. While there’s much to be improved across our water sector, the UK remains a global leader in the provision of safe, clean and reliable drinking water and water recycling.
Markets across the world, including Asia-Pacific, the Middle East and the US, look to the UK to understand how they can improve their own provision.
We need to be more vocal about the value our sector creates for society, including the complexity of systems and feats of engineering, which keep our taps running and effectively recycles our wastewater. This isn’t about ignoring the issues but balancing the challenges with industry strengths.
Greater communication about the work we do will help educate customers on water usage, improve behaviours, reduce demand, and show care for our water resource and the environment. Crucially though, it will also encourage fresh talent into the industry – showing the engaging, worthwhile careers available. This will help address the acute skills shortage the industry faces.
The current pipeline of major programmes is arguably as close to a once-in-a-lifetime opportunity to achieve this as we will ever see in water. People like to work on large-scale, impressive capital projects which the sector is set to deliver over the coming years.
We should capitalise on this chance to attract the best and brightest to join our industry.
Working smarter
Bringing more people into the sector is just one piece of the puzzle. Realistically, the volume of people needed to deliver on the investment through traditional ways of working simply isn’t affordable or available.
Water companies therefore need to ensure they’re working smarter, making the most of resources through better use of new tools and technology to increase efficiency.
And while the sector has benefited from being data rich for some time, it generally doesn’t take full advantage of data. It must drive evidence-based decision-making and decision-supporting technologies that empower value-based total expenditure decisions.
Over recent years, water companies have been investing in both operational technology and software to make more data-led decisions and speed up processes, most visibly through smart meters.
More widely, this development has also included, for example, greater monitoring of leakages, distribution modelling and geographic information systems. These allow for the visualisation and analysis of complex datasets, such as customer consumption patterns and asset performance.
To accelerate digital delivery, clients also need to ensure that they’re setting up and embedding the right digital strategies, benefits management, governance and capabilities. This is a case of providing leaders not just with the numbers, but also with the intelligence and benefits realisation insight they need. This will help them identify the best levers to pull to improve and optimise performance at pace.
The substantial investments planned for AMP8 and beyond require agility and real-time insights into the supply chain's capacity. This will help with the extensive workload, as well as the growing complexity of portfolios, enhancements, and price control deliverables risks.
With this complexity comes a much greater need to take a programmatic approach to managing these portfolios. This includes systemising delivery, continuously monitoring performance and optimising resource to drive maximum value for investors and for bill payers.
Expanding and enhancing cross-sector collaboration
More effective delivery also comes down to how the sector works together. Water companies have long led the way in collaborative supply chain management.
Anglian Water has underscored the power of alliancing models to create more effective ways of working through previous asset management cycles. Northumbrian Water and United Utilities are now investing in enterprise models to ensure all parties are working towards common objectives.
But the magnitude of the challenge for the sector means clients must look beyond their own supply chains.
Instead of working in siloed regional pockets, some companies are utilising greater cross-sector collaboration to tackle issues like water resilience at a national level. Ofwat is encouraging this trend through incentives, including innovation funding and strategic resourcing options.
These are being explored to promote resource sharing between different water companies to drive efficiency.
Water companies are making progress working with third parties – farmers, highways, councils – to deliver holistic, system-wide solutions. However, they need to build this collaboration and enhance education and commercial environments to further support third parties in investing in the system-wide solution.
At Turner & Townsend we’re working with our clients to facilitate cross-sector collaboration, where benchmarked, anonymised performance data from across the industry can help to pinpoint and prioritise areas for improvement.
This could be in the productivity and efficiency of combined sewer outflow programmes or the cost and commercial management of a reservoir programme.
This type of sector-wide data provides benefits in several ways. It increases confidence in whole lifecycle investment decisions, providing evidence of programmes’ value for money. It also streamlines assurance processes and allows faster value-based decision-making based on up-to-date information.
This level of data – in a standardised format and system – will also put clients in a better position to capitalise on artificial intelligence innovations.
There are also lessons to be learnt from adjacent sectors – especially within oil and gas with its asset health and value mindset, or low carbon energy and rail sectors. Major programmes in these wider areas of infrastructure share many of the challenges we face in water, not least around the growing pressure on aging assets.
There’s also the potential for greater collaboration around solutions, particularly with asset health, digital tools and making the most of skills.
Building a resilient future
AMP8 poses a significant opportunity for the water sector to improve programme outcomes, build the resilience of our water and water recycling asset systems, and showcase itself once again as a world-leading UK export.
To deliver this performance step change and change the course of public opinion, water companies need to carefully consider how their programmes, supply chains and peer relationships are set up.
Operations must continually be enhanced to work smarter, attract the next generation of talent, and be in the best position to deliver value for customers.