Research signals new approach to asset management
A major collaborative study from UK Water Industry Research (UKWIR) into how the sector can create future value through asset management has published a final report. In this Q&A, co-programme lead Carol Cairns , strategic planning manager, Northumbrian Water, explains why a step-change in asset management is needed.
UKWIR’s latest report responds to its big question, ‘How do we continue to create value through asset management decision-making?’. Why is this a key question for the water sector to explore?
Good asset management decision-making underpins everything we do as water companies, in terms of investing in the right areas and operating efficiently and effectively on behalf of customers, the environment and communities. Ensuring we derive that value from decision-making is important, as is being able to understand the value of your asset management interventions and investments.
How does the report define value?
When it comes to value of investment, indicators other than financial should also be considered – for example, environmental and social values. As such, a library of 157 value measures has been developed, encompassing natural, social and human elements, in addition to the more traditional financial indicators.
This reflects what is happening in other industries, where it has been shown that innovative reporting frameworks drive diversity of thinking about what is important to an organisation.
For most water companies, while traditional assets remain in place, natural solutions and digital assets are now being delivered alongside. In addition, there are well established educational and social outreach programmes, which derive value – but how can that be measured using traditional planning or cost benefit approaches? We need a step-change in thinking so we can measure value across a broader range of indicators.
What were the project’s aims?
The project aimed to create a standardised, evidence-based asset planning framework for valuing and selecting investments that deliver resilient services. Three UKWIR sub-projects were merged, which looked at asset health, scenario planning and value frameworks.
For scenario planning, the key was to recommend a consistent way of looking into the future and to consider some consistent scenarios for what the future could look like. For example, what climate change scenario are companies all using in their long-term planning? Are we all using it in the same way?
The purpose was to create a framework that the whole industry could adopt, which will help bring consistency to decision-making and lead to greater confidence that systems will be ready to respond. It will also mean that when water companies submit their business plans to regulators, they are all working under a consistent framework.
For value frameworks, all water companies are at different stages of the journey in moving towards value-based decision-making, which is why consistency is needed. The same applies to asset health where benefit is identified in the adoption and alignment of common metrics.
It is hoped that as companies start to implement these frameworks, they will gather some rich insight and best practice which will be shared with the rest of the sector.
The report is described as transformational. Why does asset management need to evolve?
Water is dealing with multiple competing challenges. If, as a sector, we are going to make asset management decisions in the way we have in the past, we will not meet the high expectations of our customers and regulators; nor will we address environmental challenges or deliver our climate and net zero commitments.
These issues, along with rising costs, are all putting pressure on our service. There is a need to adopt a more strategic approach to making these investment decisions, now and in the future.
Who from the sector should be reading the final report?
The water companies of course, but also regulators and suppliers, consultants and contractors – it is an enabling project, so it applies to everyone! For utilities, lessons within the report are broad and will be relevant to different departments – from c-suite level right through the whole value chain, including strategic and tactical planning, delivery, procurement and investment.
The supply chain will benefit from finding out how their clients are going to be valuing their investments. Suppliers should be interested in how their clients undertake strategic and tactical planning and what impact that may have on them in terms of delivery.
I hope regulators will also read it and consider how the regulatory framework can be evolved to facilitate a consistent approach to asset management decision making.
The project demonstrates significant collaboration, with authors from engineering consultancy Atkins, technology company Ovarro, University of Manchester and asset management consultancy AssetResolutions. There was also a steering group with representatives from water companies and regulators. What are the key benefits of bringing so many stakeholders together?
It was great to have such a broad church of experts with many different types of experience. The project benefited just as much from the input of mature companies, as it did from those who were less mature - we were lucky enough to get the views of both. If the sector is going to solve the big challenges it is facing, it needs new thinking from both inside and outside the water sector.
What is your main takeaway from the report?
The bringing together of such a diverse network of experts, led by Atkins, was a major success.
Thanks to the team’s hard work, the sector now has frameworks to work from, which is a great starting point for asset management transformation; the foundations are there and so is the momentum to build on them. Efforts must continue to embed that practice.
How will those involved ensure opportunities are developed?
Water companies need to look at how they can implement these learnings within their own organisations and create that community of practice. They should view this as a fantastic opportunity to articulate to customers the value of investments.
We have a more socially aware customer base and people’s interest of the environment around them has heightened. We all want to see the sector make a positive impact on the environment, rather than a detrimental one, so being able to quantify the benefits of repairing a treatment works or building a new pumping station is really important reputationally and to build trust and engagement with our customers.
Water sector companies and organisations will be invited to steer the next phase of UKWIR’s big question on asset management, with a workshop and review of the project’s roadmap planned for early 2023. Please contact UKWIR if you would like to get involved.
UKWIR has developed 12 Big Questions to tackle the key challenges faced by the industry, now and in the future. These were identified through extensive consultation and discussion with our members and stakeholders. More information can be found at ukwir.org