Water & Wastewater Treatment Magazine
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18 | APRIL 2018 | WWT | www.wwtonline.co.uk • WATER COMPANY VIEW 'It will be useful to have DPC as part of the toolkit available to us.' MARTIN GEE COMMERCIAL DIRECTOR UNITED UTILITIES When introducing something as novel as DPC it's inevitable that we will all end up learning by doing to some extent. December's final methodology statement from Ofwat set out a clear direction for how companies should look to reflect direct procurement in their plans – the challenge is now for us to state how we propose to take it forward and the evi- dence and assumptions that have led us to make the proposals we will make. Ofwat's guidance acknowledges that the precise details of the approach for direct procurement are likely to be quite specific to each project and provides us with flexibility to evidence the best approach and incorporate it in our plans. That's a really helpful way of ensuring that direct procurement exercises are done with the end goal in mind, which is about ensuring that the project is delivered in the way that ensures best value for the customer. We also recognise that direct procurement is a journey rather than a single action – so we need to set out the route map now and then regularly evaluate what the next steps are. The importance of the £100 million threshold has probably been overstated somewhat. What matters with DPC is to what extent it provides scope to deliver the best value for money for customers. We need to look at the evidence: if it's the best option then use it, if it isn't then propose something else. And there are other factors at play that will determine this other than the money involved – for example, is the project discrete? Is the asset passive? The opportunities for DPC to offer best value are undoubtedly going to be greater the bigger the size of the project – but that's not to say that there might not be an opportunity even if the project was as low as £100 million. We are at the very early stages of understanding how much direct procurement will happen and what the cost-saving potential is, but my guess is that it's likely to be restricted to a relatively small (single digit) number of projects in AMP7. We are committed to The Works: Direct procurement Haweswater Reservoir is set to be the subject of a resilience project for United Utilities in AMP7 doing our best to make it work but the ultimate success of DPC for the industry as a whole will depend on a range of factors such as the external market environment and the possible perceptions of political risk. In a few years' time things could look quite different, so we will need to see how things evolve. In the meantime, it's useful to have DPC as part of the toolkit available to us. We will be proposing a project at PR19 which we believe is a candidate for direct procurement and we will be proposing to deliver it that way. The project is to provide more resilient water supplies to populations in Manchester and the Pennines who are served by the Haweswater Aqueduct, which brings water 90km from the Lake District. We have undergone detailed consultation with customers to understand what they want to see out of the solution and have invested a lot of time in understanding the best approach to managing this risk. We're in the process of finalising this and setting out what we think will be a strong case for a DPC solution with a DP competition being held in AMP7.