Water & Wastewater Treatment

WWT April 2018

Water & Wastewater Treatment Magazine

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Page 14 of 43

www.wwtonline.co.uk | WWT | XXXX 20XX | 15 Delivering differently The Works T rust and efficiency are two terms that are oen bandied about when debating the kind of water and wastewater services customers expect. And, according to Ofwat, delivering more of what matters to customers is at the heart of its final methodology for the 2019 price review (PR19). As part of PR19, Ofwat is promoting the use of direct procurement for customers (DPC). In essence, DPC will allow water companies to competitively tender for a third party – a competitively appointed provider (CAP) – to design, build, finance, worth £100 million or more. It's clear that Ofwat is not billing the DPC approach as a sweeping replacement for the provisions companies currently make for outsourc- ing services to third party providers when delivering ongoing operations and maintenance. The onus remains on the water company to select a delivery model that is most efficient, while viewing DPC as a complementary approach that could provide an alternative delivery method for major projects. Customer benefits The proposals for DPC directly feed into Ofwat's four key themes for PR19: customer service, long-term resilience, af- fordability and innovation. These themes all fall under the overarching banner of delivering better value for customers. "The key driver, as with everything we do, is about where we can deliver benefits for customers," says Ofwat principal, strategy and policy, Graham Knowles. "With DPC we've got two key benefits that we're targeting. One is in terms of competition for finance for larger projects because we think there's a possibility to drive down costs in that area, specifically for large standalone projects that are dif- ferent to the run-of-the mill projects. "The second is in terms of innovation and whether or not we can drive innova- tion in the delivery of projects, which might help in terms of driving down delivery and operating costs." Knowles reveals that the regulator is open minded about the ways in which in- novation can be implemented. "The thing about innovation is that you don't know what it looks like until it turns up. When we look to other sectors, for example in terms of delivery, there are cases where there have been significant operational savings in offshore transmission networks in the electricity sector and also in terms of the construction that is undertaken," he explains. "When you get new players in the market, you oen get new ideas and new ways of working. That can help bring costs down and bring new practices into the sector, so there are innovative benefits there." Guy Ledger, client director at Atkins, agrees that the opportunity to share best practice and introduce more innovation could present a key advantage for the UK's water industry. "The key benefits of raising project specific finance are really about an opportunity to do things differ- www.wwtonline.co.uk | WWT | APRIL 2018 | 15 operate and maintain infrastructure that would otherwise be delivered by the incumbent water company. "We want companies to use DPC where this is likely to deliver the greatest value for customers," Ofwat stated in its final methodology for PR19. While direct procurement certainly isn't an entirely new concept, DPC differs from other tendering and contracting deals currently seen in the water sector. The approach involves companies tender- ing to deliver more aspects – namely, the necessary financing – of large projects Caption Ofwat's continued aim to drive efficiency and value for customers will see the introduction of a new direct procurement methodology to the water sector as part of the 2019 price review. But what is being asked of water companies, and will the changes have a real impact? By Nadine Buddoo The Lee Tunnel would have exceeded the £100M threshold

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