In an Expert Focus article for Waterbriefing, Steve Morris, MD at Huber Technology, reflects on the challenges of delivering innovation within increasing cost constraints the water companies will face in the upcoming AMP7 investment period.

Steve Morris: With the publication of Ofwat’s initial assessment of the water companies’ business plans, it seems like an opportune moment to consider how suppliers can help the water companies deliver innovation within the cost constraints of PR19.

For PR19 the regulator has set out four priority areas where it wants to see standards improve across the board – namely affordability, customer service, resilience and innovation.

Ofwat’s initial assessment said no company’s business plan was sufficiently ambitious, innovative and high quality to be awarded ‘exceptional status’.  Only three companies were categorised as fast-track, with ten as slow track and four in the significant scrutiny category.

Ofwat has said that whilst it thinks that all the plans reflect the importance of innovation, most companies have some way to go. Likewise on resilience, the regulator wants to see resilience in the round more firmly embedded across the whole of each individual water company business.

The supply chain stands ready and keen to help the water companies achieve the challenging goals they will need to meet in the upcoming investment period.  In my view, there are a number of areas where they could work together to create the best possible environment and maximise the opportunities to do so.

Driving innovation down the supply chain?

Firstly, I frequently see references to pushing innovation down to the supply chain – but what does this really mean in practice? Sometimes the reality of doing this across the extended supply chain of Tiers 1, 2 and 3  suppliers – without a specific innovation champion in place - can effectively have the unintended consequence of stifling innovation uptake.

The question of what innovation really means can also of itself be an issue. Frequently, many stakeholders can be involved in agreeing the adoption of innovative solutions – and the absence of commonly agreed definitions can create difficulties. So achieving a clearer understanding and acceptance of a broader definition by all parties concerned can often have a key role in actively driving uptake.

Creating a positive environment where innovative solutions can be brought to the table should be encouraged. As TOTEX thinking gains traction there will need to be increasing understanding across stakeholder boundaries to deliver the real value on offer.

The importance of water companies engagement with suppliers at the appropriate time, and their receptiveness to accepting new ideas at design stage, are often key to identifying and then implementing the most innovative solution available - two examples in our own work spring to mind.

Firstly, a major upgrade at Duncrue Street, Belfast, Wastewater Treatment Works where considerable collaborative effort between HUBER, the main contractor Graham Construction and Northern Ireland Water from the outset ensured a successful outcome which exceeded all parties’ specifications and site requirements.  

In another more recent project, working with contractor JN Bentley on a value engineered solution at Hull Wastewater Treatment Works, HUBER were able to influence the design and deliver operational benefits as well as capital and civil cost savings.

Cost savings - high on the agenda in PR19

Cost savings will be high on the agenda in PR19 and the water companies will understandably be looking for more for less from the supply chain. This is likely to be an even bigger objective in the face of ongoing industry scrutiny as to whether the water companies are providing value for money and delivering best service for customers. 

Creating the optimum conditions is a pre-requisite for this and will strengthen the water companies’ ability to address and refute some of the arguments put forward to support the case for renationalisation.

The sector needs to be clear-eyed about this - it’s true to say that suppliers see a lot of inefficiency associated with the delivery of projects, including at the scoping and design stage.

A simple example is the impact of delays between optioneering and final project design and release. Multiple designs, continual iterations and duplications have cost implications for both the supply chain as well as the water companies, and an opportunity to improve the efficiency of this process exists.  Tier 2 capacity to innovate can be restricted by tying up resources handling changes in scope and design, which is often due to unreliable data and sometimes due to indecision.

Gathering data and analysing the cost implications of optioneering, schemes which are started, shelved and subsequently get reactivated would provide some useful and objective evidence of where the water companies can really strip out waste and achieve significant cost savings in the process.

Creating the space to innovate could be achieved by early and accurate sizing data, early option decisions and early decisions on which schemes will progress. The reduced time wastage could be used to collaboratively innovate.

Another factor that consumes innovation time is the need to re-educate new design personnel every AMP due the skills shortage that results from the cyclical nature of the AMP spend profile. If the whole industry retained skills better we could all focus on innovation.

Ofwat’s focus on delivering increased resilience- but with less spend- will also help to concentrate the minds of stakeholders throughout the supply chain. In this context we should all have a simple question in mind - how do you get the best out of resources via clever use of limited funds?

As a Tier 2 supplier, HUBER Technology have a clear focus in helping the water companies and their principal contractors with less spend overall to meet this challenge in a variety of ways, including:

• working out how and where expenditure will be best targeted
• innovation via the use of both new technology and enhancing existing technology.

Innovation comes in the form of both new and existing technology solutions and services

HUBER regards ongoing innovation in the field of existing technology as particularly important - the ROTAMAT® Ro9 Microstrainer is a good example of this.

The technology was introduced into the UK market 30 years ago – during which time we’ve continually been making innovative design changes and modifications to ensure our customers always get state-of-the-art technology which delivers real benefits.

Of course that’s not forgetting we’re also working on the continuing development of new products like the Q-PRESS sludge dewaterer and our S-DISC sludge thickening technology. A recently completed project for Severn Trent Water and delivery partner Costain CiM6 using the S-DISC sludge thickener cut the water company’s capital cost by 40% & operational costs by 20% at Stratford Milcote sewage treatment works.

But innovation comes in many different forms. Collaboration of stakeholders is another seemingly quick hit, where an innovative ideas, use of skills and experience can yield real benefits. 

HUBER and Wessex Water's in-house construction and engineering arm Wessex Engineering and Construction Services WECs, for example, have been selected as finalist in this year’s Water Industry Awards in the category of Alliancing and Partnership Initiative, by redefining capital maintenance programme delivery.

Savings were achieved across a programme of work via the development of a delivery methodology which will achieve ongoing savings through AMP7, and which can also be rolled out across other Wessex Water capital maintenance programmes.

As a supplier it is also important to recognise that the water companies are pursuing major innovative digitisation programmes to deliver their business plans via greater control /automation/ digitalisation and the extensive use of real time data to manage their operations.  At HUBER we have taken a proactive approach to ensure that we are well-positioned to integrate our technologies into these digital solutions and are active within BIM4Water.

Meeting the resilience challenge by managing risk

Another key area in PR19 where the supply chain has an important role to play in helping the water companies strengthen their all-round resilience is how they manage risk. Water companies will understandably target spend to address the biggest risks. An area which does not represent a major risk will be further down the register in terms of priority.

The water companies have to adopt a twin-track approach to risk – a balancing act of competing priorities between unexpected major incidents versus predictive risk. 

Having effective and proactive maintenance plans in place is an important route for them to drive down and minimise those risks by ensuring that smaller failures or issues don’t suddenly erupt into major problems. 

We are seeing the evolution from capital spend to service spend and a growing awareness of importance of preventative maintenance in meeting the resilience challenge.

As a company we have already recognised this - HUBER has been strengthening teams, growing our workforce and making more investment in our regional service centres. We have also introduced service plans which incorporate traffic light, or similar, systems to help our customers manage spend and minimise reactive costs and inefficiencies. This is becoming an-ever more important issue for the sector.

Looking further down the line in the upcoming investment programme, further sludge deregulation plans are in prospect during the next few years, including the bioresources market which looks set for rapid expansion. Again, as a supplier we have carefully positioned ourselves to meet the water companies’ technology needs to develop their bioresources business via a complete suite of products which is already in place.

Danger that forever driving down cost comes at expense of essential investment

However, while the supply chain is ready and willing to help the water companies deliver in PR19, I’d like to conclude by sounding a note of caution which the water sector as a whole needs to take into consideration.

Whilst it seems almost inevitable that the squeeze on the supply chain will continue, it becomes increasingly important to identify the schemes which will progress, provide sufficient accurate data early on to progress design and reduced unnecessary optioneering.  Steady workflow will help to enable retention and maintain knowledgeable resource at all levels of the supply chain. This is key to driving efficiency and delivering innovation.

Objectives can’t simply be met by continually driving down cost – this will come at the expense of necessary investment.

A short-termism approach to spending still prevails across the industry – an issue which is nothing new. The perennial problem of taking short term decisions versus long term investment requirements is still with us – and a wider and honest debate now needs to take place on how best to tackle this.

If you would like to explore the issues raised in this article further, email  This e-mail address is being protected from spambots. You need JavaScript enabled to view it