When the going gets tough...
Author: Jeremy Dick, systems engineering director
Last week, Ofwat issued their interim determination which reinforced the messages that they have been delivering since the start of PR19. Water companies need to build in greater resilience and greater efficiency to provide better value and improved service for customers.
As we’ve seen at close range through our consultancy and advisory work with the major water companies, the UK water industry is under pressure like never before. Higher customer expectations, environmental pressures driven by population growth and climate change and the challenge to keep bills affordable have all combined to give the industry its toughest price review since privatisation. Add to this an ageing asset base, a workforce 50% of who are over 45, and political and media commentary on such issues as water leakage and sewage pollutions, then the scale of the challenge is nothing short of monumental.
Put simply, customers and Ofwat expect the companies to deliver more for less.
The rise of performance commitments (PCs) and outcome delivery incentives (ODIs) has in many ways been beneficial to the companies. On the one hand, these give focus to what customers and the regulators feel is important. On the other hand, the drive from Ofwat for companies to achieve ambitious upper quartile performance targets on leakage, supply interruptions, sewer flooding, etc., has only served to ratchet up the tension between increasing performance and reducing costs.
It is clear, this time round, doing more of the same in AMP7 will not produce the performance that water companies need to satisfy their customers and Ofwat. So, a new approach is required.
Helpfully, Ofwat has provided a clue within its guidance for PR19. At least part of the answer to this conundrum could be in the adoption of a robust and well thought through systems-based approach.
Things got tough for the Oil and Gas industry a few years ago when the oil price dropped through the floor. They needed a step-change in engineering and operational practices to offset significantly reduced revenue. Shell, BP, GEC and others turned to Systems Engineering in an effort to work better and faster and reduce costs.
Our experts in Systems Thinking and Systems Engineering that provide consultancy and advisory services to Costain’s clients across water, energy, defence and transport, were at the leading edge of this work. Using our deep domain knowledge and practical expertise, we not only identified efficiencies, we also helped our clients realise them.
So how do Systems Thinking and Systems Engineering help improve performance?
- helps identify the right problems to solve
- helps find the right solutions to those problems
- addresses human factors that affect performance
- helps develop the solutions in the right way
- reduces development time and costs (lower CAPEX)
- reduces OPEX through whole-life consideration
We are now taking a leading role in driving the application of a model-based systems approach to deliver resilience, performance and efficiency in the UK water industry. Working collaboratively with clients we practice systems thinking to understand context, discover real needs, define desirable outcomes, develop holistic solutions, and apply systems engineering to deliver those solutions that rise to the challenge the industry is facing.
So, when the going gets tough, the tough get going with a systems-based approach.
Jeremy has over 20 years’ experience across a broad range of industry sectors implementing tool-supported System Engineering, including the definition of processes, selecting supporting tools, configuration and customisation of those tools, and mentoring teams in their application. He is prime author of the Springer book, “Requirements Engineering”, now in its 4th edition. With Costain, he is now promoting systems engineering in infrastructure and other domains.