Eighteen months after its completion, the 2014 Worsfold Review of the Government’s Flood and Coastal Risk Management (FCRM) programme has finally been published following an intervention by the Environmental Audit Committee to get the Review into the public domain.
The Worsfold Review was commissioned by the Government to look at the maintenance of the Environment Agency’s flood and coastal risk management (FCRM) assets following the flooding of winter 2013-14. It was completed in September 2014 but has not been made public until now.
The independent peer review was conducted by Mark Worsfold, formerly the Chief Engineer at water industry regulator Ofwat and now Director of Asset Management at South West Water.
The Review was established to assess whether the Environment Agency can make improvements to its performance and achieve efficiencies in delivering its maintenance and investment programme in flood and coastal risk management (FCRM) assets. This involved comparing and contrasting the asset management practices, policies and procedures with those in place by the water and sewerage companies in England and Wales.
Based on this work the Review made 33 observations and made 11 key recommendations.
Review shows “worrying decline” in vital flood defence assets
The review’s preliminary observations and recommendations were presented in April 2014 to a steering committee that included HM Treasury, Defra, Infrastructure UK and the Environment Agency.
Announcing the publication of the Review last week, Mary Creagh, Chair of the Committee said:
"It has taken 18 months and an intervention from my Committee to get this Review published and into the public domain.”
“Mark Worsfold’s Review showed that the condition of the Environment Agency’s vital flood defence assets showed a worrying decline in 2014.”
“It raised concerns that the Government’s partnership funding model for flood defences could "distort economic delivery decisions or create delivery inefficiencies".”
This afternoon we will be seeking clarification from Ministers about what action they have taken following the Review."
Review says capital costs “should be examined on the basis of lowest whole life cost”
The Review’s main conclusion was that the management of flood defence assets is primarily driven by asset condition, which does not help the Environment Agency forecast service and expenditure requirements. It goes on to suggest that this has highlighted the need to improve investment planning processes and capabilities for modelling and predicting operating and capital costs.
The review proposed that such costs should be examined on the basis of lowest whole life cost and should start to be considered on a total expenditure basis (whilst recognising that operating cost and capital costs may be both defined and incentivised differently)."
The Review also recommended the need for greater clarity over the Environment Agency’s role in FCRM, better engagement between the Environment Agency and local affected communities and also between the Environment Agency and the government.
“Recommendations could lead to same capabilities and efficiencies achieved in water sector asset management”
The review was commissioned following the flooding of winter 2013-14 by HM Treasury, the Department for Environment, Food and Rural Affairs (Defra) and Infrastructure UK.
In March 2014 Mark Worsfold, then Chief Engineer at Ofwat, was asked by Infrastructure UK to carry out an independent peer review of the maintenance of the Environment Agency’s flood and coastal risk management (FCRM) assets. Both Ofwat and the Environment Agency are members of Infrastructure UK’s client working group.
The review identified a number of key areas around asset data and processes where improvements could be delivered. In particular this has highlighted the need to improve investment planning processes and capabilities for modelling and predicting operating and capital costs.
The Review has made eleven key recommendations based on thirty-three observations identified as part of the detailed benchmarking between the Environment Agency and the water sector.
“The recommendations have been set out to be part of a wider change programme to deliver a “2020 vision” for FCRM and to provide the Environment Agency with the recommendations that could lead to the same capabilities and efficiencies that have been achieved in asset management in the water sector,” it says.
The Environment Agency directly manages about £20 billion of these assets and has oversight of a further £15 billion that are managed by others.
Key recommendations include:
Improve customer legitimacy and deliver an outcomes focus
The expections of communities impacted by flooding and the role and obligations of the Environment Agency do not appear to be in alignment. Defra and the Environment Agency should consider customer legitimacy in the management of FCRM assets. They should consider the tools applied within the water sector and how these can best be used.
Improve customer legitimacy within programme prioritisation
Defra and the Environment Agency should consider the extent to which public consultation should influence the prioritisation of investment. This should include potentially using customer preference approaches that are adapted for activities funded by government.
Improve governance and accountability
The Environment Agency should be clearer about the ownership and accountability of the FCRM investment programme.
Improve asset management datasets
The Envonment Agency should significantly improve the quantity and quality of its asset management data and information.
Develop asset analytical and modelling capability
The Environment Agency should develop a centralised analytical and modelling capability to improve its knowledge about its assets, support a move to a more asset focussed approach and drive efficiencies in the way it targets assets for investment.
Develop risk-based programme optimisation capability
The Environment Agency should develop dedicated systems and resources capable of supporting economic and efficient asset interventions and forecasting future requirements.
Optimise on the basis of whole life costs and benefits
The Environment Agency should use asset whole life costs and benefits to optimise its FCRM programme. This should inform budget setting and programme planning.
Develop contractual partnerships
The Environment Agency should consider the role that long term contractual partners can have in delivering the FCRM programme. In the water sector contractual partners have been key players in delivering dynamic and innovative investment programmes, the review says.
The Environment Agency should consider how partners can work alongside its own staff and how these resources can be deployed together in emergencies.
Improve procedures and processes for capital delivery associated with partnership funding
Defra and the Environment Agency should improve the process and procedures in delivering investment funded by partnerships. The primary aim of this should be to reduce perceived bottlenecks in delivering the FCRM programme and establish how partnership funding could be balanced with programme contingency in order to maintain a pipeline of efficient delivery.
Improve conveyance processes
The Environment Agency should improve the conveyance procedures and processes associated with managing rivers and watercourses. This should develop a better understanding of the data, costs and benefits of dredging and watercourse management. It should also establish a clear process and risk-based whole life cost for these activities.
More public engagement should be used as a tool on the FRCM programme
The Review also says that the Environment Agency should carry out further public engagement to establish this process as an appropriate tool to use on the FCRM programme.
Clarify the role on third party assets
Defra and the Environment Agency should review the Environment Agency’s role in relation to assets owned by others. They should clarify the responsibilities, processes and procedures around third party assets particularly where the assets support communities at high risk of flooding.
“Investment in third party assets to reduce flood risk in the high risk communities may be more cost beneficial than investment in Environment Agency assets in other areas, “ the review says.
Programme of change for FCRM could deliver 12-17% efficiencies in both revenue and capital spending
The Environment Agency and Defra should consider the delivery of the key recommendations in this report as part of a wider change programme to deliver a ‘2020 vision’ for FCRM. This would require separate funding above that already in place. The review estimates that the costs of delivering a change programme would be about £20 million. But the programme could deliver significant benefits. This includes 12-17% of efficiencies over a five year period across both revenue and capital spending.
Levels of investment should not be lowered below 2014-15 levels
Commenting on funding requirements, the review says that “whilst neither the Environment Agency nor Defra consider that additional funding is currently required beyond that set out in 2014-15….. the reviewer considers that it would be difficult for the Environment Agency to provide an evidenced based justification for an increase in funding above 2014-15 levels.”
“ Conversely it is considered that levels of investment should not be lowered below 2014-15 levels due to potential risks around uncertainty and climate change.”
According to the review, since privatisation the water sector has delivered significant improvements in efficiency and service improvements. It states:
“ HM Treasury, DEFRA and Infrastructure UK would like to consider how learning from the water sector since privatisation could be applied within the management of the FCRM investment programme in order to support the efficiency and service improvements that are sought within flood defence.”
“No requirement for Environment Agency to maintain a flood risk defence once constructed”
The review also makes the interesting observation that there is “no requirement for the Environment Agency to maintain a flood risk defence once it is constructed”, pointing out that partnership funding has the potential to confuse this position when contractual arrangements are not clarified.
In considering any increased clarity of expectations, the review says consideration of the effective lifespan of the flood defence asset and over what period an economic benefit has been assessed within the original construction design life should continue to be taken into account.
EA should apply water sector SIM principles and outcome delivery incentives to FRCM
One of the key recommendations is that the Environment Agency should consider applying the principles within the Service Incentive Mechanism (SIM) customer experience across its customer engagement and front line staff interactions. The review states:
“ Such an application should consider the experience of the customer and hand offs between different elements as part of staff interactions and how these maintain ownership and accountability within the organisation. The development of performance commitments and outcome delivery incentives (ODIs) for the FCRM programme will provide greater clarity of objectives and transparency with the end user or customer.”
“Consideration should be given to the development of an appropriate incentive mechanism to incentivise innovation and positive management action by the Environment Agency. Benefits assessment for maintenance within FCRM using a consumer preferences approach could consider the use of alternative methods.”
“Any surveys to gather consumer preferences data could be undertaken on a periodic basis (typically say once every five years) with the consumer preference data being applied within programme prioratisations. Maintenance schemes could be assessed on cost benefit ratios…, whilst enhancement of new flood defences could use cost benefit ratios derived with consumer preference data.”
Agency should look at cost savings from outsourcing or nationally procured services
It also suggests that the Environment Agency should consider whether there are cost savings in either outsourcing or nationally procured services in comparison with the current DLO and local commissioned contracts.
“DEFRA and the Environment Agency should improve the process and procedures around capital delivery associated with partnership funding. The primary purpose for the review would be to alleviate perceived bottlenecks in the delivery programme and establish how the partnership funding approach can be balanced with programme contingency in order to maintain an efficient delivery process.”
The Review also proposes that the Environment Agency should deliver a forward pipeline of maintenance projects of at least 3 years to delivery partners and use the feedback from delivery partners to identify efficiencies which should then be factored back into programme optimisations and target costs.
As in water sector - customer legitimacy should be taken into account
Defra and the Environment Agency should consider the issue of customer legitimacy for Flood Defence and Coastal risk management. The expectations of communities impacted by flooding and the role and obligations of the Environment Agency do not appear to be in alignment.
Investment decisions around the maintenance of existing flood assets are not as transparent as those associated with the creation or enhancement of new flood defences.
Consideration should be given to the benefits and tools applied within the water sector and how these could be best utilised to improve customer legitimacy.
Defra and the Environment Agency should consider the issue of customer legitimacy for Flood Defence and Coastal risk management and the extent to which public consultation should influence prioratisation.
Asset management data should be significantly improved
Commenting on its recommendation that the Environment Agency should significantly improve both the quantum and quality of its asset management data and information, the review says this should have a particular focus on:
- targeted improvements to asset inventory datasets (such as date of construction etc)
- recording construction material (where not known)
- performance information on the assets
- maintenance and repair activities and associated costs
- timely information on flooding events and near misses
- overtopping, collapses and rodent infestations
- the development of serviceability metrics
- operational costs of asset management activities and interventions.
Long term delivery partners as in water sector…. are a key player in a dynamic and innovative investment programme
On the development of contractual partnerships, the review says the Environment Agency should consider the role that framework partnerships will have within the delivery of a holistic whole life cost and benefits FCRM programme, commenting:
“Long term delivery partners with incentives aligned to outcomes and delivered efficiencies are commonplace amongst the water sector, the benefits of these relationships cannot be underestimated and they are a key player in delivering a dynamic and innovative investment programme.”
“The manner in which operating and capital partners will deliver economic and efficient interventions alongside internal staff and how these resources could be deployed as a single team during emergency responses should be given careful consideration.”
It also says forward pipeline visibility of the FCRM programme of at least two years - preferably 3 - will support the delivery of efficiencies as the supply chain will be able to plan more effectively.
Click here to read Environment Agency Flood and Coastal Risk Management (FCRM) maintenance review IUK Client working group – peer review in full