How to value social outcomes in the water sector
28.07.22
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6 min read
Author: A keynote speech from Sam White of Costain, followed by a panel discussion on how to value social outcomes. Panellists were Lila Thompson of British Water, Michelle Ashford of the Water Industry Commission Scotland, Marcus Rink of the Drinking Water Inspectorate, John Thompson of Wessex Water and Luke McLaughlin of United Utilities, with the debate chaired by Jeremy Galpin of Costain.
Infrastructure is facing enormous challenge, including population growth and climate change, making economic and environmental resilience now more urgent than ever.
Although constantly changing demands are being placed on the water networks and wastewater systems of the UK, simultaneously, there are opportunities for water companies to drive social value outcomes, reshaping the approach to assets and infrastructure and setting the course for long term sustainable value.
So how do we respond to the challenges and opportunities as water sector professionals? Can a systems approach help deliver the desired outcome?
In this article, members of the expert panel at the Water Sector Investment & Capital Projects conference, organised by Built Environment Networking, explore the major factors driving change and the value of social and environmental outcomes when you look at the bigger picture.
Successful project delivery is now more than simply delivering the end goal. It’s about collaboration, digitalisation and innovative thinking combined with the overarching need to look at the water network as an entire system. A collection of parts that work together to form a complex whole.
The water industry is making huge strides in thinking differently to deliver more. The first in a series of OFWAT innovation fund competitions, which are expected to run until 2025, are a fitting example of partners working together to provide game changing initiatives across the industry.
Technology, such as digital twins, is helping to reduce the impact on the emerging skills shortage by assisting in visualisation, standardisation and optimisation of assets and infrastructure (as demonstrated on the Strategic pipeline Alliance led by Anglian Water). Adopting these digital delivery techniques with innovation such as 3D printing, modular build, and on-site production, can help to deliver more with fewer people, and, of course, most importantly, in a safer way.
If we look at energy as another utility that is facing huge change, the format of the industrial cluster to create a collaborative ecosystem is proving successful. Focussing in on a region with the biggest carbon emissions and working together to provide a solution is working. South Wales for example is the second highest industrial and energy generation emitter of carbon dioxide in the UK producing over 16 million tonnes of CO2e per annum. Costain is Lead partner in the Deployment project of The South Wales Industrial Cluster that was formed in 2019 and brings together 17 partners exploring the feasibility of decarbonisation projects to reduce emissions. With 35 projects in the plan, the impact and potential equate to £3.5bn investment into South Wales with ambitions to create c. 5,000 new, skilled jobs in clean energy infrastructure.
Reshaping our approach to these challenges requires looking at water infrastructure and assets in an ecosystem of connecting environmental, regulatory, and economic elements. The earlier we make decisions; the more impact we have on the outcomes we deliver, and that is why I believe we need to shift to values-based approach to assets.
Defining social value
Defining social value helps to shape the data we collect and how we do that. As the panel Chair, Jeremy Galpin emphasised that social value needs to be sufficiently broad for us to make decisions and shift to a value-based approach to our business cases. He highlighted that social value for infrastructure assets is both the intrinsic, and the extrinsic impact of the asset, on the wellbeing of society, throughout its lifecycle.
As an example, the intrinsic value of our recent Tideway project is cleaning up the River Thames and the core of the green financing was based on this purpose. But the project also excelled in delivering across a range of legacy objectives. These were not essential to the asset, and therefore extrinsic to the project, but delivered value, including volunteering and local employment opportunities.
Social value is a fundamental shift in thinking, and, therefore, this needs to be undertaken collaboratively. As a sector, we’ve already embraced a genuinely collaborative approach to delivering a joint sector vision. In Scotland that has included the drinking water quality regulator, SEPA, Scottish government, Citizens Advice Scotland, Customer Forum, and us.
Focusing on outcomes and impacts
The regulatory environment can help drive this shift in thinking. The next regulatory framework must address customer needs, but also natural and social environment needs.
If you are going to focus on outcomes, you need a flexible, adaptable regulatory environment that enables businesses the opportunity to innovate and work in partnership to achieve those outcomes, but still be held to account. Rightly so, we need to demonstrate that companies provide the required services and performance for customers, communities and the environment.
Supply chain shift to social value
It’s important that the supply chain understand the expectations of customers and their suppliers. At the same time, we can learn and share a lot from our supply chain, so it’s vital to work in partnership.
Greater supplier involvement requires engagement early on, so we can ensure the right outcomes for the future. So, in terms of the supplier ecosystem, we need to think about the impacts of project planning on different stakeholders, including any potential adverse effects on the supply chain.
Technology as an enabler to measure social value
Better gathering and management of data can also be enabled through use of technology, using a range of digital tools.
We have a programme to implement a new software solution – an asset and investment planning solution. At the heart of that is a value framework. This is looking at the service measures we have mapped across the multi-capital's framework, and where these intersect with what we’re doing, and the impacts that has, to be able to value it.
We need to capture social value data, both extrinsic and intrinsic, across the lifetime of the asset. The systems to do this need to allow the use of suitable proxies that are publicly available and licence free, and transparently allow for the monetisation of outcomes aligned with the government latest green book guidance on wellbeing.
For all these reasons, Costain is working with partners such as innovate UK, and have developed a new Cloud-based platform called the Intelligent infrastructure Control Centre, using SAP technology. This brings the operational data from an infrastructure project together in one place where it can inform decisions and transform delivery. We are also partnering with innovative platforms, such as the Thrive social value platform and the Commonplace Stakeholder Platform , to help our customers measure their impact, and link this data into the digital twin model.
How social value and digital can come together in the future
We spend a lot of time understanding what’s the right data and, just as important when you have the data is, what’s the right question? It’s easy to use the grand term of digital. But you have to specify with the data what you want, and be absolutely clear about it, to drive behaviour. As soon as you provide data and metrics based upon outcomes, everybody focuses on that outcome and all the other elements are forgotten, and that’s one of the real challenges.
Conclusion – reshaping our approach
Positive change is already happening in water companies and, with increased collaboration, initiatives that take a wider values-based approach will drive strong change.
Planning for interactions between and within the water ecosystem as well as with wider stakeholders, can help deliver optimal results.
Together, we have a fantastic opportunity to respond to the challenges the industry is facing and leverage the policy and political landscape to reshape our approach to assets and infrastructure.
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