The supply chain holds the key for innovation in AMP7

An open dialogue between water companies and their contractors and other partners will be essential, says Matt Cannon.

Water companies aren’t taking a second time lucky approach to re-submitting their PR19 business plans.  Instead, they’re channelling Ofwat’s ‘delivering more for less’ mantra into a spread of impressive commitments on innovation, affordability, customer experience and resilience.

However, in the fight to achieve the significant 13.4 per cent cost reductions demanded by Ofwat, the supply chain needs to be an ally, not a stress ball.  Contractors and other partners have a crucial role to play in shaping the future of the sector, but it’s essential that this emerges from an open dialogue rather than downward pressure.

As the boots on the ground, our teams have invaluable frontline experience that will help water companies develop and deliver the innovative, customer-centric strategies that Ofwat wants to see.  Capitalising on this means ensuring that delivery frameworks are set up to encourage better collaboration and – crucially – outcome-focused rather than output-focused relationships.

Ensuring partners are working towards shared goals means more than a water company’s logo on a contracting operative’s safety gear.  It needs alignment at every level, working smarter to redesign processes and management structures to bring expertise to the fore, however it is badged.

Grounded innovation

Of Ofwat’s four key drivers, ‘innovation’ is arguably the key that will unlock the other three: better customer service, improved affordability and greater network resilience.  For instance, we know that digital tools are already proving to be a game changer around leakage, an area where Ofwat is expecting to see a demanding 15 per cent reduction in AMP7.

Our experience tells us that it can cost water companies in a typical region of England or Wales up to £10m annually in workforce resource alone to investigate leakage.  Yet with tools that we have developed with our technology partner Dootrix using Microsoft’s Azure platform, we predict this cost could be almost halved through more effective use of machine learning to identify leaks quicker and fix them more efficiently.

As the end user of leakage detection systems, the contractor is in many ways the linchpin for the cross-sector technology partnerships the water industry needs to embrace. Our expertise drawn from live situations will be key to leading on the practical application of these innovations.

The acceleration and commoditisation of Internet of Things technology driven by growth in the smartphone industry now enables data gathering on a scale that would have been financially and technically impossible just five years ago. This is fundamentally changing not only the way services are provided to customers, but also the commercial models and capabilities of supply chain partners.

Greater saturation of technology also holds the power to transform public thinking about our industry during AMP7.  Perception is set to play an increasingly crucial role with Ofwat’s C-MeX methodology taking a wider approach to customer satisfaction beyond those who have actively contacted their water company.  Unfortunately, too often we’ve struggled to escape portrayals as an old-fashioned industry devoid of innovation.

In this context, the mobile device rather than the dowsing rod in our operatives’ hands becomes even more powerful.  This is true not only for our customers, but also for the tech-savvy generation considering a career in an industry that, like most, is in desperate need of new blood.  They, like us, want to see progress.

Bringing the supply chain on board

Contractors’ expertise can help water companies to deliver business plans that will foster this kind of transformative innovation, not only for the next five years to 2025, but ultimately laying the foundations for a truly modern water industry.

Companies will be waiting on bated breath for Ofwat’s latest determination, but the hard work is only just beginning.  It’s vital that the supply chain is engaged at an early stage if we are to jointly deliver on the regulator’s expectations for an innovative, affordable network.