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The UK water industry requires long-term planning to ensure resilient, sustainable, and cost-effective services. Water companies must provide Ofwat with an “adaptive plan” to manage long-term challenges and uncertainties, particularly for the Price Review. This approach helps ensure that companies can make informed decisions that address both immediate and future needs.

Historically, the water industry planned for the most likely future, creating cost-efficient plans. However, this approach can lead to significant issues if the future deviates from expectations. Ofwat's adaptive planning requirements address this by encouraging water companies to consider various futures and develop resilient, adaptable plans. This involves justifying decisions based on different scenarios and building flexibility into strategies. The process includes assessing historical usage, climate projections, and feasibility analyses while accounting for uncertainties in cost, time, and impact. This ensures better preparation for different eventualities, leading to more sustainable and resilient water management.

South West Water approached us with two main challenges: creating an investment plan for their metering program and developing an adaptive plan for regulatory submission.

Location

  • United Kingdom

Solutions

Adaptive planning

We evaluated South West Water’s extensive list of quantified, viable projects to address their challenges over the next 25 years, considering various future scenarios and uncertainties. Our task was to identify an adaptive plan that meets three key goals: the least cost plan, the best value plan (considering both cost and monetised benefits like biodiversity and carbon), and the best plan for societal and environmental benefits (excluding capital and operational costs). This optimisation aimed to ensure the client could maintain a zero supply-demand deficit for water, meet consumption targets, and eliminate water extraction from rivers, all within a 25-year framework.

Metering decision analytics

We developed optimisation models for household and non-household demand projects. Various strategies were tested over 25 years for minimum cost, best value, and societal value. Through numerous iterations with data updates and feedback, we refined their demand planning, enabling South West Water to create a robust, defensible plan for the regulator.

The adaptive plan

This work formed part of their WRMP24 and PR24 submission, and they were recognised by Ofwat as one of only two water companies in the UK rated as outstanding. Adaptive planning played a crucial role in achieving this recognition.

WSP’s adaptive plan algorithm is instrumental in this process by identifying optimal solutions through a “least regrets” approach. This method helps customers avoid unnecessary expenses and prevents negative impacts, such as habitat damage, and also considers carbon. The algorithm requires skilled operators to input data effectively, making WSP’s expertise essential. It can analyse a vast array of scenarios and initiatives to find the best combination, a level of scrutiny difficult and extremely timely to achieve without such technology. Additionally, the algorithm incorporates pivot points, offering multiple adaptation options to ensure optimal value under various scenarios. While the adaptive plan addresses immediate needs for the next five years, it also projects 25-30 years into the future, making these flexible options beneficial.

The number of options generated from adaptive planning is so vast that it exceeds the number of atoms in the universe. This immense complexity highlights the necessity of data science to effectively manage and optimise these permutations.
We are also exploring the possibility of applying this adaptive planning technique to other clients, particularly in major program planning for airports and in the defense sector. These conversations focus on managing large, complex programs and addressing the uncertainties and variations in requirements that come with them.
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