In an Expert Focus article for WaterBriefing,  Andrew Welsh, Sales Director for Water Utilities at Xylem Water Solutions, UK & Ireland, discusses how acceptable levels of risk can reduce life cycle costs for utilities.

Andrew Welsh: One year into AMP7, the pressure is on the water industry to stay abreast of ever-changing regulatory outcomes – and to deliver them.

The burden to meet targets has been intensified by growing focus around wastewater treatment and pollution, as evidenced by a Panorama documentary aired in April which accused utilities of dumping sewage illegally in rivers.

Building resilience and reliability to mitigate risks is crucial for the industry, meaning the effective operation of assets within networks is a priority to meet the challenges faced every day. Individual asset optimisation and risk-based decision intelligence hold the key to reducing life cycle costs and delivering lower operational costs and better outcomes, enabling reinvestment in strategic resilience planning for whatever the future holds.

Establishing the right technical solution – and understanding its true levels of tolerance and sustainability, and concurrent risk – is the key to then delivering efficiency.

Though a certain level of risk can be tolerated, if taken too far, life cycle costs rise exponentially. If utilities know accurately where to mitigate risk, it can bring cost savings and allow reinvestment in greater mitigation, in order to meet targets and avoid penalties as well as reputation-damaging headlines.

A closer look at the pressures of AMP7

With Ofwat's price review controlling customer spend, ‘doing more with less’ has become the industry’s mantra: utilities must be more cost-efficient, meaning ever more careful decision-making on every pound spent.

With targets on outcomes from leakage, flooding and pollution, to CAPEX, critical network assets can either pose the biggest risk or offer the greatest advantage. Utilities need reliability and resilience above all. This extends to clean water supply – with the emphasis on smart metering to accurately measure every drop used or lost – and to wastewater removal, with the pressure to avoid service interruptions in spite of aging networks.

Water companies require complete and accurate information from all phases of the asset’s lifecycle in order to make useful decisions on asset management, energy efficiency and maintenance requirements. Asset managers must ensure the reliability of assets that are fit-for-purpose for the lowest life cycle costs at all stages: acquisition, use, maintenance and disposal. 

Maintaining the long-term performance and cost-effective maintenance of assets,and understanding where the hidden costs lie, is crucial to balance investment needs with Outcome Delivery Incentives (ODIs).

Optimising every pound spent

Steps can be taken at each stage of the life cycle to limit wastage of energy or manpower and improve the bottom line. This begins at the design/ acquisition phase, where longevity can be guaranteed by selecting quality assets that will outlast their counterparts. At the operational stage, there is the opportunity to address spiralling energy costs in pumping stations, for example, which can account for 84% of the total cost of ownership of a pumping station (with purchase just 5%, maintenance 10% and environmental costs 1%).

When considering the maintenance stage, monitoring is key to gaining the maximum saving on life cycle costs. Correct monitoring of assets can detect incipient issues that can be fixed before they become critical, and help to maintain the long-term performance and cost-effective maintenance of assets such as pumps, pumping systems and other associated control equipment and operational activities.

Life cycle costs can also be reduced at the disposal step by selecting sustainable options from the outset for asset managers keen to optimise whole life decision-making every time utilities invest.

Incorporating decision intelligence within maintenance

Let’s explore the options available within maintenance across both clean water and wastewater networks. Better mapping and understanding of the assets within the complex existing infrastructure offers the opportunity to optimise what is already available.

Rather than investing in new assets - and handling their costly disposal or replacement when they cease functioning - utilities can slash life cycle costs by harnessing the decision intelligence from existing data within the networks.This data can be used to analyse performance of assets and enable water companies to optimise systems and processes throughout the cycle, and set new thresholds related to risk.

Prioritising maintenance to better manage risk

Mapping hardware and then ascertaining what needs replacement or rehabilitation with the help of data captured from relevant intelligent products can help utilities move towards a condition-based maintenance strategy, according to the needs of the network. Smart technology can be deployed to capture and evaluate the useful data to help build a picture of the network and understand the condition of the assets within it.

This can identify a pump showing signs of wear and tear or deteriorating service, for example, allowing for better life cycle cost decisions: timely maintenance could avoid a pumping failure and save on the huge cost of tankering wastewater as a result.

As well as allowing the early detection of potential failures, this type of monitoring can provide real-time information to identify inefficiencies either in the equipment itself or the surrounding process and highlight problem assets to allow valuable resources to be focused where necessary.

By prioritising limited maintenance resources to target assets with the greatest need of replacement or servicing, water leaders can target and tackle the hidden costs that are impacting on financial performance, and potentially avert spills, overflows and disruptions to service and supply.

Understanding when to accept risk – and when to act

An aging infrastructure, pollution, and flooding and drought linked to climate change are all testing the industry on a daily basis.

As water companies face their toughest challenges to date, if risks are taken to extremes, life cycle costs will soar.The legacy of risk-based decision-making now poses a threat to the network and customers which the regulator is calling on utilities to tackle within this AMP period.

To avert further sanctions for non-compliance, a suite of tools exists to manage risk and costs, allowing certain levels of risk to be accepted or mitigated, according to the criticality of the asset.

The core solution remains to map assets and harness the data available from those assets in order to build resilience, better inform maintenance according to condition, and prevent incidents and downtime.The right partner can provide insights to establish the best course of action to strike the correct balance.