Water & Wastewater Treatment

www.wwtonline.co.uk | WWT | JULY 2015 | 9 Comment T his month my car broke down again. In fact, it seems hardly a month goes by these days without something going wrong with it: a flat battery, a flat tyre, faulty lights, an un- reliable alarm system. I'm beginning to resent the cost, especially as it's the type of car that does not do many miles to the gallon, is expensive to tax and causes problems every time it goes for its MOT. If only I'd been aware of all these hidden costs when I was deciding whether to buy it: given all the information, I might have chosen a more practical run-about that would have been cheaper to drive and given me far less hassle over the years. Alas, all I saw at the time was a nice-looking set of wheels that came with a seemingly attractive price tag. You could say that Mapping out the maintenance I paid the price for making a poor assessment of the car's whole-life cost. I'm not the only one who is susceptible to this kind of failing. Many water companies are in a comparable situation with many of their assets: they paid too much attention to up-front costs when they made their buying decisions, and not enough to running costs such as maintenance. In this month's industry round table on the implications of Totex-led regulation (see p19), we hear how some of the country's biggest water companies are planning to do things differently in this AMP cycle. Whether it is buying assets that last longer or have a lower operational cost, maintaining assets in a smarter fashion or even deciding not to build an asset at all, the utilities are attempting to respond to Ofwat's call for decisions that make sense in terms of total expenditure. But if predicting the lifespan and maintenance cost of a car is a difficult job, then it doesn't take much to imagine how much harder it is for the variety of complex assets there are in the water industry. As the participants in our round table explain, there is little standardisation of maintenance requirements across asset type, even James brockett eDItor JamesBrockett@fav-house.com Twitter: @wwtmag for a relatively simple asset such as a pumping station; and no consensus over how long that asset ought to last. The waters become even murkier when non-asset solutions are considered: it's currently quite difficult to measure the benefits of catchment management, for example, even if ploughing money into catchment initiatives seems instinctively to be a good idea. And how do variables of risk – for example of asset failure leading to a pollution fine – feed into that equation? However, what became evident through our round table discussion, and other discussions I have heard from the industry on Totex, is that the exact calculations are less important than the overall principles. In releasing the industry from the sometimes artificial division between Capex and Opex, Ofwat has actually given water companies the freedom to pursue their desired outcomes via what they perceive as sensible economic decisions. They might lack all the information they need to make the perfect decision – just as I did when I was working out which car to buy – but at least they are now encouraged and incentivised to take all the right factors into account. Industry view sponsored by keith Hayward Hydro International Totex is a neat term, and an even neater theory: invest pro-actively in the lifecycle of a process, rather than just buying equipment with the lowest-possible capital price tag. The result should be more cost-efficient operation, in which maintenance and engineering costs are measured, monitored and optimised. It was a privilege to be on the panel for the WWT round table debate on Totex and its implications for the water industry, featured in the pages of this month's issue; I found it immensely encouraging and I learned a great deal. The debate certainly convinced me that the idea of Totex is being enthusiastically embraced – but Turning Totex from Theory to Practice realising it will be an entirely different matter. Because Totex is precisely that: an idea – albeit a good idea that can aid the transition to new ways of working. As the equipment supplier representative, my priority was to ask: "How does a water company define the whole life value of an asset? What is the actual desired life cycle period and how is it defined? What are the operator's requirements for life expectancy and availability? How can these expectations be built into models to finance asset lifecycle costs? How far could such approaches be standardised across the industry? In the old world of Capex and Opex, procuring equipment for the lowest price is straightforward with the lowered cost seen as a saving: But how much has that initial saving cost you in the long-run? How much more will have been spent to maintain and power that asset a er 5, 10, 20 or even 50 years? There is little data to tell us, and so the change from 'lowest cost supply' up front to 'best cost supply' under Totex represents a very significant challenge. If our industry can truly work through these questions then we will open the door to innovation and for new technologies that deliver better operating performance and energy savings. If we develop financing and procurement models that foster innovation, we can deliver consumer value. If we combine this with better planned maintenance, and condition monitoring – so we can really measure what the savings are - then we will have made progress. It's a big ask and finding practical methods to reverse the capex trend will require some joined-up, collective thinking across the whole industry. I hope the round table will be the start of a true industry collaboration that outputs a practical roadmap for change. keith Hayward is National Sales and Marketing Manager for Hydro International's European Wastewater division. Hydro International is a leading provider of innovative technologies for the treatment of wastewater and surface water.

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