This is a guest contribution from the International Water Association (IWA), a network of water professionals striving for a world in which water is wisely, sustainably and equitably managed. This article originally appeared in the May 2020 newsletter of the IWA Specialist Group on Strategic Asset Management.
Decision Analytics: Driving Capital Efficiency in an Evolving Industry
Over the past century, the water industry has steadily increased its technical and business proficiency, while improving public health and protecting the environment. However, water utilities today are facing unprecedented challenges related to the stewardship of this robust yet aging infrastructure. Renewal and replacement of water and wastewater assets are key concerns, yet budgetary constraints and limited public support for rate increases are making it increasingly challenging for utilities to continue to meet service level targets and minimize disruptions.
As utilities evolve their strategy to adapt to these challenges, they must align their investment decisions to support new goals and objectives. They must focus their limited capital and labor on the continued quality and reliability of the essential services they provide, while simultaneously investing in new technologies and initiatives to manage resource availability and meet future demands.
In a world of aging assets, and ever-increasing constraints, making decisions about which projects to invest in, and when, is no easy task.
For the last 20 years, Copperleaf has been helping utilities deliver capital efficiency. This means ensuring every euro is being spent in the most effective way possible—to maximize the value each project delivers to the utility, its customers, and society. The company's experience and methodology have been incorporated into an enterprise software solution named C55 that has been adopted by some of the largest, most well-respected organizations in the world—across a variety of sectors.
Decision Analytics at Work
A good example of why utilities might adopt Copperleaf’s asset investment planning solution can be found at Anglian Water in the UK. When it embarked on a 10-year journey to improve its asset management practices, the company recognized an opportunity to enhance its expenditure optimization and planning capability, and establish an industry-leading investment planning practice.
While Anglian Water had a high level of investment planning maturity and capability, the Strategic Investment Management team recognized that advances in enterprise software and visualization could help the company stay at the forefront of investment planning best practice by addressing a number of key goals:
- Create a living plan from which any regulatory submission is a simple snapshot
- Provide better insights into the risk and performance of the entire asset base
- Bring together an understanding of asset risk, cost planning, project scoping, and investment plan optimization, alongside actual spend on in-flight projects
- Integrate whole life asset management from cradle to grave, i.e. consider all costs throughout the lifecycle, as opposed to just assessing capital investments
- Ensure investment decisions support the company's strategic goals and commitments - in alignment with ISO 55001 best practices
Chris Royce, Anglian Water’s Head of Strategic Investment summarizes the deployment of C55 as follows:
We now have a fantastic solution that combines the power and capability of the core C55 solution with the maturity of the UK water sector. It’s really exciting to see. This continuous planning and management capability really puts us in a new space. From a functional perspective, the key thing is that Copperleaf comes at it focused on shareholder value and their top down financial optimization gives us an enhanced capability to build the best possible plan for our shareholders and customers.
Asset Investment Planning & Management (AIPM)
AIPM is a best practice that helps asset-intensive organizations make complex investment decisions with confidence. It can help identify and evaluate asset risks and opportunities, understand how they change over time, and make decisions that deliver the greatest value to the organization. AIPM is highly aligned with ISO 55001 and provides an enterprise-wide platform that enables businesses to:
- Predict the long-term needs of diverse assets: forecast asset sustainment needs based on risk and economics, and create an investment strategy that maximizes business value while proactively managing risk
- Optimize portfolios of investments to realize the greatest value: identify the optimal combination of investment alternatives and timing that respect all funding and resource constraints—and deliver the greatest value to your business
- Manage portfolios to maintain the highest performance: establish a more efficient and effective process to manage investments through their full lifecycle. Track variances between planned and actual performance and re-optimize plans to drive continuous improvement
Water is our most critical resource, and the reliability and resiliency of our water infrastructure impacts our health, our quality of life, our environment, and the economy. Decision analytics can help water utilities align investment strategies with the initiatives that will best address these key challenges—today and in the future.
Asset Management in the water sector must be focused on managing water infrastructure in a sustainable way, while dealing with performance, risk and cost, with intergenerational responsibility. To learn more about the IWA's Strategic Asset Management group, please visit their site.
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