Water & Wastewater Treatment

The impact of PR19 The Talk: opinion O n 16th December 2019, Ofwat agreed to a substantive package of investment in the water industry totalling £51 billion over the next • ve years in England and Wales. Key head- lines included proposals to spend £13bn for the provision of resilient services and environmental improvements. These are to cope with climate change and popula- tion growth, particularly relevant to water companies in the south of the country. So, what does this mean for contractors and the wider supply chain? What are the key trends we are likely to see over the next • ve plus years? Overall investment will rise in AMP7 - Ofwat have approved an overall increase in forecast expenditure from the last AMP period. Whilst this is good news for the supply chain, some will reap the bene• ts more than This means anyone over 18 can be asked their perception of their water company. Only a small population directly experience services from water companies, so perception is determined by what they see (roadworks, driving behaviours) and hear (feedback from friends or social media). How can contractors and suppliers deliver innovative approaches to improve public perception? The Institute of Customer Service high- lights companies like Amazon for brilliant service. Think streamlined mobile commerce, 24/7 support, robust supply chain where seven-day working is normal. We expect our emergency services to be available on a continual basis, why not water and wastewa- ter? How can the end to end supply chain and stakeholders make this happen? Could local authorities, quarries and tarmac plants open at weekends? Supply chain resilience - it may be the Ca- rillion e— ect, but recent procurement activities have shown a shi˜ from appointing large Tier 1 providers to smaller, more agile suppliers. Suppliers must demonstrate • nancial resil- ience as well as ™ exible service delivery and adjust their operating models by working col- laboratively with others, or as Yorkshire Water stated; present a 'family feel'. It's important that the supply chain continues to consider how they can add value and remain relevant. A number of large Tier 1's employ their own supply chains; some water companies are opt- ing to engage Tier 2's directly to remove a layer of cost and bring the supply chain closer. Innovation - Ofwat has promoted more innovation and set up an innovation fund in AMP7, but innovation isn't something you buy o— the shelf. Innovation requires R&D investment in the early stages. We have seen novel approaches by companies such as United Utilities with an 'Innovation Lab'. The purpose is to address the age-old issue of how to attract the wider supply chain and leading- edge technologies into the water industry. Who should lead innovation? Some water companies believe that the supply chain is best placed to share ideas. Environment and sustainability – Contrac- tors will be expected to re™ ect clients' carbon reduction targets by recycling more, using local suppliers, and reducing their carbon footprint during construction. This is chal- lenging when fuel is the biggest contributor to carbon emissions. Electric is an option, but the infrastructure is not there – how do you charge 30 vehicles simultaneously at 7am? AMP7 includes delivery of signi• cant environmental programmes – what are the 'next generation' products and techniques the supply chain can bring? In summary, water companies need the supply chain to support them in the ultimate 'three ball juggling act' - achieving e¦ ciency savings, demonstrating environmental stew- ardship and delivering a fantastic service. Noela Fitton, head of strategic projects at Network Plus, discusses the potential impact of PR19 on contractors and the supply chain. others as investment will be more targeted in areas such as resilience (new reservoirs and construction of large pipelines to ensure con- tinuous supplies), leakage detection and re- pair, wastewater environmental programmes (WINEP) and sewer ™ ooding. More for less – Ofwat has secured much of the PR19 investment by demanding "greater e¦ ciency". AMP7 is far more challenging than any previous AMP, with water com- panies committing in excess of 10 per cent bill reductions in real terms. What can the supply chain do to support water companies in achieving real e¦ ciencies in a sustainable manner, whilst ensuring they continue to earn a return for their businesses? Focus on customer perception as well as experience – the recent move by Ofwat from SIM to C-Mex and D-Mex has set the scene with the introduction of a perception survey. 20 | MARCH 2020 | WWT | www.wwtonline.co.uk

• Cover
• Contents
• The Talk
• In Focus
• The Knowledge