Utility Week

34 | JANUARY 2021 | UTILITY WEEK Operational Excellence Event Making more of data to improve capital delivery When it comes to managing complex supply chains, minimising risk means gathering the right data and then using it properly, say participants in a virtual round table convened by Utility Week and Oracle Construction and Engineering. Denise Chevin chaired. P ressure from regulators on water and energy companies to make e ciency savings as they enter new price control periods is turning the spotlight on the way capital projects are managed. It's led to some companies in the water sector (now at the start of AMP7) to decide to manage projects in-house and hire tier 2 and 3 contractors directly, in a bid to reduce costs and boost value. Tier 1 contractors are no longer the automatic go-to option as they have been in the past. And as Ofgem begins its RIIO2 price determinations with the gas and electricity transmission companies, the same trends are emerging in energy transmission as well as distribution organisations. So, as supply chains become complex and interwoven, what is the best approach to managing information and helping organisa- tions collaborate and connect with the centre and each other? How big a role can data play in managing risk? And are energy and water companies managing the data they hold well enough to provide the best information for informing their decision-making? These were some of the questions posed at a roundtable discussion with a group of procurement, commercial and operation directors from water and energy network companies. The event was convened in November and held in association with Ora- cle Construction and Engineering. Here we highlight some of the key talking points. Bringing design in-house and promoting greater collaboration between suppliers A number of those around the table talked about changes in capital project delivery, and in particular working directly with tier 2 and 3s, with networks now moving in the same direction as water companies. There was a clear trend towards bringing more design capability in-house, as well as appointing technical consultants early. The aim of that is to spend more time honing projects before the delivery stage, which can drive e ciencies. All agreed that the regulatory price peri- ods did not make for the most e cient delivery, but as one network participant put it when referring to the new Πve-year con- trol periods: "ED1 was eight years and now it's going to Πve years. We're not moving to longer periods. Regulated industries just have to accept that cycle and put measures in place to minimise the impact." The need to give suppliers more information As companies look to cut out tier 1s and work directly with the tier 2 and 3 suppliers, what has become apparent is the need to provide these suppliers with as much information as possible, and as early as possible, to allow them to plan and invest in innovation. Said a water company director: "We're Πnding out that our supply chain want access to our thinking and access to our data in ways that they haven't asked for pre- viously and we are working hard to try and give them that high level of access. "We feel that we need to be giving them that, particularly if we want them to do their best Рparticularly around innovation. "So, we can say for the entire AMP period what we want to resolve and what sites we want to work on." However, the director warned: "There's a diРerence between what is interesting for a supplier and what is valuable. I'm not sure we're quite there yet. It's interesting for a supplier to know that we are spending X amount on our screens, but more helpful and valuable if we can be more speciΠc and say what we need at the product level, so we need X hundred of a particular product and we're going to need it for Y number of years. It gives them the conΠdence to invest and be innovative." Getting to know suppliers was also imper- ative. "It's quite easy if you have Πve partners and you are working with them. If you have an ecosystem with a greater number of sup- pliers then you have to take the trouble to get to know them, Πnd out about their needs," said the water director. However, another participant said that using tier 2 and tier 3 contractors necessi- tated a much more hands-on approach. "We are getting involved in much more micro- management of our supply chain. It's not the best use of eРort Рbut seems necessary given the cost challenges we're facing to drive every drop of e ciency. "We want to be able to track the individ- ual activities being carried out on site. It is all about striking the right balance and building up our conΠdence in the supply team so we then can step back." Gathering the right data and using it properly As appetite for risk diminishes and water companies and networks look to control pro- jects more tightly, getting the right data at their Πngertips is critical to allow their pro- ject managers to make the right decisions, both in real time and at a portfolio level. However, there was also common agree- ment that it's not necessarily about generat- ing more data, but the better use of data. One participant explained how he was trying to get his project teams into a mindset that recognises that the data they are pro- ducing is an asset, so it's not just the physi- cal asset they are delivering. "We are under enormous pressure to reduce our carbon footprint, so the opera- tional performance data of this building will be invaluable to feed into speciΠcations of the

• Cover