Utility Week

UTILITY WEEK | FEBRUARY 2021 | 33 Operational Excellence C hallenged as to why the Trans- bay Terminal development was millions of dollars over budget, former San Francisco mayor Willie Brown famously retorted that people should just live with it. "In the world of civic projects, the • rst budget is really just a down payment," he said. "If people knew the real cost from the start, nothing would ever be approved. The idea is to get going. Start digging." So, was he right? Some may agree with Willie Brown, but here at VISION and Relevate, we don't. Our teams have expertly guided several megaprojects (and many other sig- ni• cant capital projects) to comple- tion on budget, on time and with all the promised bene• ts. While the price tag bestows the "mega" label to a project, other de• ning factors include longer timescales, a multitude of active stakeholders, a signi• cant impact on public and private enterprise • nance, the project's future in mar- kets, and the community it serves. The scale, risk and impact rela- tive to the budget holder's enterprise value is clearly visible, and achiev- ing the project's bene• ts becomes the central focus for the budget holder. As the project encounters unplanned di‰ culties, sacri• ces are made, one on top of another, in pursuit of the bene• t. Budget hold- ers break agreements, collaborators become enemies, suppliers reduce quality, everyone accepts longer timelines, and costs spiral higher. Many people blame the estima- tors for the problem. Most theorists write about the overcon• dence bias, the optimism bias, the planning fallacy (where planners do not adequately assess risks.) There is also "strategic misrepresentation" – otherwise known as lying – which is sometimes excused by the "hiding hand" thesis of economist Albert Hirschman. Hirschman's theory is that, while we are overoptimistic about what we can do, we are also overly sceptical about how creative we can be in overcoming things going wrong. Of course, one solution to ending the mismanagement of megapro- ject budgets is to simply get rid of megaprojects altogether. But the reason we build these projects is as testimony to the heritage and great- ness of our community or organisa- tion. These are projects that demon- strate technological wonder by doing something never done before. They are o' en projects of aesthetic great- ness and iconic beauty. They create economic impact in their marshal- ling of resources and their payments to all the workers involved. They establish monuments that will last for decades, even centuries, and it is very hard to put a value on such greatness. We say that accepting cost over- runs as inevitable is nonsense. We know that you don't have to blow your megaproject budget – not if you know what you're doing, and we do. Our track record proves it. You can deliver the full bene• ts of your megaproject on time and on budget. In our next column, in the April issue of Utility Week, we will explore the four key areas you need to address to execute a megaproject properly: transformational leader- ship; transformational governance; the sharing of risks and rewards; and commitment-based management. If you want to learn more before then, you can read the full report How to Fix Megaprojects at https://utility- week.co.uk/how-to-• x-megaprojects- and-all-capital-projects-that-matter, where you can also download a pdf, or visit visionconsulting.co.uk VISION is an international organisation that helps businesses transform their operational practices, leadership, and culture for the long term – a combination that is essential for organisations managing capital projects of signi• cant scale. EXPERT VIEW VISION CONSULTING "Megaprojects can be built on time and on budget – if you knowhow" Could open data be used in the water sector to encour- age new business models and service o– erings that also bene• t vulnerable customers? It's now the water sector's turn to explore the possi- bilities of new, digital concepts and • nd innovative ways to address the major challenges we face. Ofwat's water innovation competitions, which we'll be running in part- nership with Nesta Challenges, Arup and Isle Utilities, will be central to achieving this next year. Enabling this change Our £200 million Innovation Fund launched in early 2021 to grow the water sector's capacity to innovate. It includes the inaugural £2 million Innovation in Water Challenge (IWC) and a second, larger competition open- ing in the spring. Up to £250,000 in funding is available per winning entry for the IWC. We believe collaboration and partnership both within and outside the sector will be essential to the success of the IWC – as it will be to the wider vision of the sector – and so we're expecting water companies to seek out innovators and third parties, and want to encourage innovators in • nding water company partners. I recognise that matchmaking between water com- panies and innovators has not always been straightfor- ward, but the truth is that innovation can sometimes come from unlikely sources. To help enable these part- nerships, our delivery partners will be running a series of events where organisations – retailers, academia, supply chain, innovators or others – can meet water companies and discover common ground. We hope the competitions will also lead to new and long-lasting partnerships and culture change that live beyond these initiatives. And as we move towards open- ing our main competition in spring – with a prize pot of £40 million – some of those relationships will need to develop even further. This year is undoubtedly going to see some signi• - cant developments in the water industry as we work together towards transformational change. We expect to run di– erent rounds of these competitions until 2025, but our goal is that the Innovation Fund's impact will continue well beyond this – helping the sector in its ambitions to reach net zero emissions and tackle climate change, o– ering customers more a– ordable solutions and better value for money, and reducing the damage of sewage leaks and pollution of our waterways. These competitions work in tandem with the wider 2050 Water Innovation Strategy. The strategy, the Water UK net zero route map and the challenge statements that the industry has created as part of this will be valuable resources for entrants to the competitions who need speci• c information on the problems and solutions the sector needs. Yet, we have the potential to transform our sector way before 2050 – through the competitions, but also through creative and open thinking, collaboration, and being open to a new way of working. It's going to be an exciting year ahead and I, for one, can't wait to see the innovations and ideas coming through. John Russell, senior director, strategy and planning, Ofwat

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