Ofwat is currently in the midst of conducting its next price review, PR19, which will set the prices that water companies charge customers for the five years from 2020. The deadline for draft business plan submissions is early September, with each of the 19 incumbent water companies in England and Wales having to submit detailed planning documents for the forthcoming five-year period, documenting price, asset and bid assessments, together with a complete financial model.
This five-yearly review process entails collating and analysing data, from customer experience to asset resilience and performance, from each provider and delivering assessments. It is a huge undertaking and costs tens of millions of pounds to the taxpayer – contracting PwC as “delivery partner” for PR14, the last review programme, cost more than £6 million. A major contributor to the large expense is a varying level of technical maturity and absence of data regulations across water companies, particularly in terms of how data is collated, recorded and analysed.
Water bills have increased by 40 per cent over the past 30 years and there is growing unrest among consumers about the service they receive. Establishing a more efficient method of converging all the information water utilities need to provide to Ofwat could significantly reduce these sums, with potential benefits for consumers and infrastructure investment.
Tackling a lack of consistency
The key to this is linking datasets so companies could conceivably create a comprehensive, digital, round-the-clock overview of how their assets are performing and the information needed for measuring performance against targets, such as customer experience, asset health and overall resilience.
But the industry is holding itself back. There is a low level of understanding about how data can and should be used, exacerbated by the advent of new technology. There also tends to be little organisation around who is directly responsible for not only creating the data, but moreover managing the information, which often leads to significant inconsistencies in how data is analysed and managed across each provider.
The upshot is that the UK water industry lacks a universal format or “language” for classifying data within individual asset portfolios and across the sector. Without this consistency, reconfiguring the information manually is a highly time-consuming and expensive job, for both Ofwat and the water companies.
A uniform approach
The industry needs a culture change in how data is considered. If it is regarded as an asset in its own right, we are much more likely to realise the benefits offered by digital analytics. Together with a consistent approach to how data is recorded, analysed and managed, there needs to be a commitment to treating the information in line with the same regulations and respect that physical infrastructure assets are given. And this is without further delving into the security of data and digital assets.
There are already clear, established guidelines for how data should be handled for assets in the BS1192 principles. But these only represent best practice recommendations and are not mandatory. What’s required is a commitment across the sector to adhere to these rules if we are to see a more rigorous and consistent approach to managing information.
The application of these standards, in unison with disruptive technologies, will unlock the next age for digital enterprising. This is way beyond the colloquial and product-based solutions we are inundated with in the marketplace, with far more elegant and universal platforming solutions set for the near future.
An anticipated example in AMP7 should be the compression of costly design and build activities in the lifecycle of assets. This will deliver less emphasis on capex, and influence direct delivery models to incorporate more digital asset management (Dam) within their core, as well the opportunities for greater collaboration and the bonding of operational data.
Treating data as an asset class goes hand in hand with building a stronger digital culture. The skills needed to deliver a comprehensive Dam programme are in short supply and businesses need to focus on nurturing their employees to fully understand the value of data and how to collate, analyse and manage it. This means developing training schemes that can build these skills from the ground up, to create a new generation of data scientists who can implement and manage infrastructure that allows information to be collated from individual assets and flow into a single capability, either within a water company or regulator.
While data management is not the only reason behind the high costs involved with the five-yearly pricing review process, the potential for efficiency savings evidences the vital role that Dam could play. Data demands will only increase, and by driving digital cultures and ensuring a commitment to consistency across the sector, Ofwat would have the option of using the savings to improve services and reduce water prices for the public.