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ENERGY, RENEWABLES AND UTILITIES: WATER UK
WORKING TOWARDS A SUSTAINABLE WATER INDUSTRY Water UK represents all major UK water and wastewater service suppliers at national and European level. They provide a positive framework for the water industry to engage with government, regulators, stakeholder organisations and the public
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ater UK is an organisation that represents all major UK water and wasterwater service suppliers at national and European level. Through a supportive framework, it provides the water industry with a platform to engage with government, regulators, stakeholder organisations and the public. At the heart of the organisation is its long-term vision for a sustainable water industry. This will be achieved through efficient provision of water and wastewater services and a commitment to a number of key goals. These include protecting and promoting public health; providing a high quality, reliable and value-for-money service; responding to climate change; reducing the industry’s overall impact on the environment; and earning the trust of the community. Recent initiatives have included support towards continued investment to boost local economies.
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LONG-TERM VISION FOR A SUSTAINABLE WATER INDUSTRY 4 Protect and promote public health 4Provide a high quality, reliable and value-for-money service 4Respond to climate change 4Reduce our impacts on the environment 4Earn the trust of the community
Water companies are now into the second half of a record £25 billion programme of investment in the future of water and sewerage services throughout the UK. Ofwat, the independent economic regulator for water, announced in January how this will affect water and sewerage bills in England and Wales from April 2013. Average household bills will rise by about £13, to £388, a little more than £1 per day. Water UK acknowledged that this is a difficult time for many customers, and any increase will be unwelcome, but the investment programme that these rises will fund will deliver benefits to everyone. It will ensure that customers can continue to rely on their water and sewerage services now and for decades into the future, at the same time making our rivers and beaches cleaner. Investment from water companies is also providing a crucial boost to local economies in all parts of the country. Regional water companies support
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thousands of local businesses and tens of thousands of jobs at all skill levels. In the last year, Water UK has gone much further, urging infrastructure providers and policy makers to work together with investors to secure an infrastructure legacy for future generations. Chief Executive Pamela Taylor said that understanding the importance of infrastructure is no longer enough: now is the time to put such understanding into action. “Investing in the nation’s infrastructure can be a good way to stimulate regional economies at a time of need – and this is indeed a time of need,” she said. “But infrastructure isn’t just something we do in a crisis – it is for the long term future of society, the environment and the economy. The decisions we make today will have a legacy that lasts for at least one generation, and in some cases many more.” www.water.org.uk Tel: 020 7344 1844
GOVERNMENT AND KEY ORGANISATIONS DEFRA Government department with overall responsibility www.defra.gov.uk ENVIRONMENT AGENCY Environmental regulator www.environment-agency.gov.uk CCWATER Customer representation www.ccwater.org.uk MET OFFICE Weather forecasting, rainfall monitoring www.metoffice.gov.uk NATURAL ENGLAND Working with farmers www.naturalengland.org.uk
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ENERGY, RENEWABLES AND UTILITIES: SCOTTISH WATER
MANAGING SCOTLAND’S WATER Scottish Water is a publicly owned company, answerable to the Scottish Parliament and the people of Scotland. Their job is to provide 1.3 billion litres of drinking water and take away 840 million litres of waste water every day
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ver the ten years since it was formed, Scottish Water has delivered about £5 billion in investment. It is, believes General Manager for Asset and Investment Management Ken Hutchison, money well spent. “We’ve transformed the business to provide increasingly good service to our customers,” he remarks. “We’ve reduced the real operating costs by £3 million per week from when we started, we’ve got the lowest average household charges of any water business in the UK and our customer service has reached record levels. “Drinking water quality is at the highest level ever for Scotland and a key achievement is reducing leakage by over 40% within the period. We’ve made massive environmental improvements and, although it’s been a difficult period in terms of cost reduction, we’ve increased the level of customer service. As a result, we’re used as a benchmark for other water authorities and public businesses within Scotland to show what can be achieved in the public sector.”
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PUBLICLY OWNED Scottish Water was formed by merging three big water authorities and is the only publicly owned water company in the UK apart from Northern
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Ireland. It provides water and waste water services to about five million customers, supplying 1.3 billion litres of water a day and handling the complete cycle from water collection right through to returning it safely into the environment. The company has a £1 billion turnover and is the fourth largest water service provider in the UK with approximately 3,500 employees. The whole network comprises 29,000 miles of water pipes, 284 water treatment works and about 1,800 waste water treatment works. There are some 1,425 service reservoirs and sewerage tanks, about 570 water pumping stations, 2,000 waste water pumping stations, 26 sludge treatment centres and 31,400 miles of sewers. The company’s organised into four regions, with the South East and South West covering the central belt between Edinburgh and Glasgow while the North East and North West are the less populated areas. Keeping everything working is a massive challenge, especially given the remote areas the company serves. The day-to-day running and maintenance of the network is the responsibility of the operations team while Ken’s section takes a longer term view. “My job is to reduce the failures and ensure the assets, the treatment works and pipeworks, are fit for use” he comments. “We are the client so we identify work that needs to be
done and when it needs to be done, we know what the cost should be and we pass it to the delivery vehicles and project manager to deliver it.” LONG TERM STRATEGY The process starts with the asset strategy team, which develops 25 year strategies for water and waste water systems. It determines likely growth, potential future legislation, the extent of leakage and other factors affecting asset requirements. It undertakes asset risk modelling to predict the failure rate of pipes and produces 25 year strategic projections of the likely investment needed to delivery the necessary water quality, environmental performance and service performance. Ken’s asset management team then works within those areas. He says: “We develop lifecycle plans for the assets to determine how to optimise maintenance. Then my team decides the long term strategy to determine what we require to invest to improve and maintain service, either to meet new legislation or address deficiencies.” Teams all over Scotland analyse the assets and put forward requirements for each one. An investment planning team then matches that need to available funding and prioritises on risk and criticality. From that, the work is promoted to delivery vehicles to incorporate within the overall plan. Once the business plan is settled, it’s committed
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to a regulator and owner, who review it and often put an efficiency challenge on the asset management team, with the improvements ultimately developed under a £500 million a year programme. DELIVERY VEHICLES That programme sets out what is to happen over the regulated period, with the current one titled Quality and Standards 3b 2010-2015. Previous periods have run for four years but this one covers five and runs in conjunction with a Scottish Water Solutions joint venture to deliver the capital programme within the funding. Part of the programme, covering things such as fleet replacement, laboratory equipment and IT, is handled internally. The main capital investment, however, is the responsibility of two delivery vehicles, with the current joint venture operating
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alongside the in-house Capital Investment Delivery team. All quality improvements are clearly defined and one aim of the programme , as Ken recounts, is to deliver everything cost-effectively within a structure: “Scottish Water Solutions works with a framework of contractors, consultants, equipment suppliers and service suppliers. Over the past six years or so, our procurement strategy has been to drive value through tenders. But we’re moving away from that now because we believe we can deliver more value through partnership working with the supply chain. We partner at high level with the joint venture company, which comprises Laing O’Rourke, Jacobs who are engineering consulting and Veolia Consultancy, the engineering arm of Veolia Water.” The partners to the joint venture work with sixteen Construction Delivery Partners that form
the framework of contractors. Their role is to deliver the individual projects that can be anything from a £130 million new treatment works down to renewing street water mains. PROGRAMME PROGRESS The current programme is half way through and has so far delivered new water treatment and waste water treatment works as well as some large tunnelling projects. There has also been removal of iron and manganese from the networks and much work on security of supply. This is being achieved partly by improving reservoirs and reducing leakage, and providing a lot more resilience in the system. “We’ve undertaken a big strategic study of the whole of Glasgow that will affect projects there because we’re taking a more strategic approach rather than simply fixing small over-
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flows,” adds Ken. “The study has shown there are some key arteries that are missing because the sewer network evolved from Victorian times. We’ve done a complete computer modelling analysis of that, of the implications of surface water getting into sewers and looked at key ways to stop flooding and sewer discharges. From that, we’ve concluded that installing some major arteries in the city will relieve pinch points, which will prevent flooding and improve the quality of the Clyde. So we’ll work closely with partners in Glasgow City Council to develop a strategic solution. The aim is not just to fix the immediate problems but to do it in the most effective way for the future.” One thing that may affect progress is the forthcoming Commonwealth Games in Glasgow in 2014, which will require certain projects to be complete by then and will impose an embargo over the duration of the event. Nevertheless, things are moving forward and Scottish Water is already looking at the following regulatory period, Quality and
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Standards TV 2015-2021, which covers a six year term. “Our strategy team has refreshed the 25 year plan with our help,” confirms Ken. “That has now moved into our six year plan and my team is developing that. “We have a high level view of asset intervention we have to do, such as improving so many kilometres of water mains and some treatment works. We’re going to start on the development of the programme, define what we need to do to help with the procurement of alliance partners and how we’re going to manage the risk rather than change our whole supply chain. Our commercial strategy is to split the programme into a number of time-lined segments rather than just handing it to delivery vehicles because we want a more tailored supply chain.” The new programme comprises a £300 million waste water infrastructure programme, a water infrastructure programme of £210 million and CONTINUED ON PAGE 844
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ENERGY, RENEWABLES AND UTILITIES: SCOTTISH WATER standalone tenders for two large projects of about £60 million each. The aim is to negotiate with the current Scottish Water Solutions partners and, if their partnership continues, use them over the next period, including in a non-infrastructure programme of about £620 million that assists the treatment works improvement. There will also be a large capital maintenance programme which will be delivered by small framework contractors. PROGRAMME CONTINUITY A change this time around, as Ken explains, aims to avoid the natural dip in the cycle between regulatory periods: “We’re trying to maintain £500 million right across regulatory periods and we’ll achieve that by having an early start programme for the next period. As soon as we get approval of the business plan, we will start working on this for the period to ensure the contractors and consultants have a sustainable workload. The idea is to have an agreed planned overhang from one programme and an early start for the next, which smoothes the workload across the regulated period.” Under the old arrangement, supply chain companies laid off people at the end of one regulatory period as the work fell away and then rehired when the cycle picked up again. This led to unnecessary expense and delay so the aim is to create a smooth transition between the programmes and a more constant workload for participants. That’s also being achieved by moving to a longer term relationship with the supply chain by engaging in a twelve year contract that covers two cycles of six years each. Other changes in the process include a more direct involvement of the joint venture partners to undertake more work themselves rather than allocating it to construction delivery partners. That avoids duplicating overheads and profit margins,
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with expected cost saving over the course of the programme. Additionally, some of the non-complex capital maintenance jobs are to be undertaken by small regional contractors, with Scottish Water organising a local supply chain for the work. Although this type of work amounts to around £500 million in value, it covers thousands of small projects across Scotland. Ken says “We’re looking to inventorise these alliances and teams to improve their efficiency, customer satisfaction, health and safety and delivery on time. For customer satisfaction, we’re aiming to be a leading customer focused asset management company. We intend to consider the customers in everything we do, right from planning to dig a hole by
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making sure everyone knows what it’s for and how we’re dealing with any issues they have.” IMPROVING SAFETY For all the activity there’s the need for health and safety, which in Scottish Water’s case applies to workers and customers. For the latter, much work has always focused on improving water quality, with specific projects in the current programme including the installation of membrane plants in water sites to protect against cryptosporidium and a pipe renovation scheme that will remove iron and manganese from the system. In terms of the workers, health and safety is of paramount importance. “It’s driven right from the
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top,” confirms Ken. “The board refreshes the strategy and the yearly action plan. That leadership is cascaded right through the organisation and my director takes a personal interest in every construction accident. He brings in the managing directors of the companies involved and they discuss what happened. We share best practice and information on health and safety with our contractors and we’ve learned a lot in the core business from the contracting world. There is a lot of crossfertilisation and strong leadership on that.” Scottish Water as a company is the biggest power user in Scotland and so is affected by the government’s target for 50% of power to be through renewable sources. It is embarking on a large renewable program, installing wind turbines and photovoltaic cells, generating power through food waste and using its land assets to establish partnerships with companies that build and run wind farms. Excess pressure in the system is traditionally reduced by installing pressure reducing valves along trunk mains at various points. That dissipates energy and so a scheme is underway to install
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devices that convert the pressure reduction into electricity and put it into the grid. The company is also looking at innovative ways of delivering renewable energy, such as installing turbines on rivers, putting photovoltaic cells on tanks and making waste water treatment works into energy cells by digesting sludge and turning it into methane to generate power. COST REDUCTION A big driver for Scottish Water has been cost reduction, with operating costs down by 40% in its first four years. That’s partly been achieved by increasing efficiency, with better working methods and equipment. Employees who clear blockages from sewers, for example, now operate individually rather than as two-man teams and have handheld cameras, computers and machines rather than rods to do the work. There’s also been a lot work on power reduction at plants and treatment works and a general rationalisation of assets. On the project side, as Ken recounts, one of the reasons for involving Llaing O’Rourke as a
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joint venture partner was the company’s experience of off-site fabrication. He says: “They pre-cast work and, if there’s a sufficient volume, can start a real production line and smooth the transition. All the electrical kit and software is tested in a dry and safe environment. We also use a small contractor, Rosshire Engineering, to put in membrane plants at water sites. They have an off site fabrication yard so they build it all in steel containers there. If we constructed them under traditional methods, there’s a lot of bad weather to contend with. Now we can drive up with a container on the back of a lorry, then plug and play.” It is an ongoing development process, with the next programme being planned and resourced well before the current one completes. Behind all the effort is a vision for Scottish Water to become
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Scotland’s most valued and trusted business. “It’s really taken hold within the business,” remarks Ken. “It’s been taken on by the staff as well as the leadership team. For our next programme, we’re consulting with our customers and we’ve been pushing hard on the consultative approach. We have a customer panel that is looking to steer some of the investment into what customers want to do. That may be reducing the level of flooding or improving the resilience of our service. So we’re going to use customer feedback to guide what we do and that will result in customer focused asset management rather than us being the asset expert and doing what we think is right.” www.scottishwater.co.uk Tel: 01383 848417
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