Should a water company invest customers’ money in upgrading or replacing a particular wastewater asset, such as a pumping station or a gravity sewer? Answering that question is not as straightforward as it might seem, and until now there has often been more than one way to reach a decision.
I work in a team which provides technical support to the Asset Health and Risk team in Severn Trent. Our role is to help apply a robust, consistent and transparent approach to identifying asset risk and prioritising those for promotion into the company’s capital investment programme. The key is identifying risks to Severn Trent, and the implications for the customers and communities that it serves.
As an example: what is the risk of polluting a watercourse if investment in a particular wastewater pumping station is not undertaken? What is the severity of that risk?
Or, if a gravity sewer fails, where would the sewage escape to? How many properties would be at risk of flooding? And what would the cost of the flooding risk be – to the company, to its customers and to the environment?
The ‘Measures of Success’ framework that we have helped develop and implement is designed to answer questions like these for any wastewater asset anywhere on the system. It creates a map that links the different components of a risk a water company must consider when investing in an asset.
The framework considers all the potential consequences of an ‘asset serviceability failure’, and the likely impact that failure would have. It concludes with a predicted annual cost associated with the risk.
The monetary value incorporates many factors. These include: the cost of repair and the cost of compensation for businesses affected by the repair; costs relating to health and safety; compensation to customers, including for property flooding; and environmental costs such as fines for polluting watercourses.
To demonstrate transparency and consistency, calculated risks and their uncertainties are quantified and documented. If there is considerable uncertainty around particular risks, these are sensitivity-tested in the associated cost-benefit analysis and highlighted as areas where greater understanding could improve future investment decisions.
This approach has been trialled on a number of individual assets where the business risks have already been identified – to quantify the costs associated with those risks. The framework has been designed to evolve, but ultimately I envisage that this will become Severn Trent’s standard approach to monetise the impact of risk at a business level. This will help Severn Trent meet its outcome delivery incentives and provide customers with the best possible service.
This blog was written by John Kreft, Senior Engineer – WSP