The Regulators’ Alliance for Progressing Infrastructure Development (RAPID ) says the accelerated gate one submissions for strategic regional water resource solutions in Southern Water’s western area presented costs that were “significantly higher” than those published in the 2019 water resources management plan (WRMP).

The comments come in the newly-published review by RAPID setting out its reflections and lessons learnt following the first checkpoint in the gated process – the assessment of solutions submitted for the accelerated gate one, which concluded in January 2021.

According to RAPID, the submissions also presented solution costs that were significantly higher than the costs published in the 2019 WRMP. The review states:

“Southern Water has indicated that the increase was due to greater clarity in the technical/delivery considerations and inclusion of optimism bias in the assessment. Without this gated assessment, it is unlikely that these significant increases in the cost estimates would have come to light.”

The regulators – Ofwat, Environment Agency and DWI – say that while solution cost is not a determining factor for decisions at gate one, they expect solution owners to flag changes to regulators “as part of our “no surprises” approach.”

“We are also working with the industry to develop an approach such that solution cost estimates are robust enough so that, when it comes to making investment decisions on solution choices, we can all, (as regulators, solution owners and customers), have confidence in the costs that have been used, the review says.

RAPID now intends to build on lessons learnt to improve the future stages of the process and to tackle the policy issues revealed:

“Our collective ambition is to work together most effectively to enable the solutions to be ‘construction ready’ in 2025-30, with those on the accelerated track to be operational by 2027.”

The finding of the review are summarised into three areas:

• practical improvements to processes and documentation RAPID has already acted on
• reinforcing the need for ongoing engagement and collaboration to help achieve better outcomes
• the gated assessment process has served to identify early some issues that may not have come to light until much later had the solutions been following a typical water resources management plan (WRMP) delivery route

RAPID has worked with the industry to further improve the submission templates for the accelerated gate one process. The regulators agreed with the companies last year to tackle this early to minimise any potential impact on the programme for solutions entering gate one in 2021, saying it they have “accepted all suggestions of change unless there was a good reason not to.”

The review also notes that it became clear from the assessment of the accelerated gate one submissions that too much focus is being placed on the actual gated submissions to the detriment of what the process has been set up to achieve – i.e. accelerating the development of the solution.

“We have therefore reviewed and revised the guidance to shift the focus to outcomes and to ensure that the submission at the gate would not detract from achieving those outcomes.”

Improvements in the revised guidance include RAPID’s updated assessment criteria, together with additional detail about ‘what does good look like.’ It also includes more guidance regarding the information RAPID expects to be submitted to support the assessment of efficiency of expenditure.

The review says:

“It is our intention that the lessons we have learnt from the accelerated process …will help solution owners to look beyond the gate submissions and focus instead on the overall solution progression.”

Click here to download Strategic regional water resource solutions: Lessons learnt review

Click here to download the updated Strategic regional water resource solutions guidance for 2021