acei irish water presentation 03 04 14
TRANSCRIPT
ACEI Seminar Red Cow Moran’s Hotel
3rd April 2014
Agenda
• 9.00-9.30 Delegates meet for coffee etc.• 9.30-9.50 Opening Introduction Jerry Grant• 9.50-10.10 Asset Strategy John Casey • 10.10-10.30 Asset Investments John Prendeville• 10.30-10.45 Asset Programmes Sean Laffey • 10.45-11.15 Q&A on Asset Management• 11-15-11.30 Break for refreshments• 11.30-11.50 Procurement Martin Action• 11.50-12.20 Capital Delivery Fergus Collins • 12.20-13.00 Final Q&A session
• 13.00 Lunch
Presentation to ACEI 3rd April, 2014
Jerry Grant, Head of Asset Management
Building a new water utility for Ireland
4
34 Local Water
Authorities
BGÉ NetworksBGÉ Networks
BGÉ Group
BG Energy
Asset ManagementCapital Project MgtProcurement
FinanceRegulation
Leverage BGE Competencies
Customer Service & Billing
Cash collection & credit control
Irish Water BGÉ NetworksBGÉ Networks
BGÉ Group
Bord Gáis Strategy
A New Group Structure
"This transfer of experience and capability will continue over the next 3 to 5 years as Irish Water evolves into a full service utility".
Irish Water Program
Shared ServicesShared Services
Key competencies source within Bord Gais
Developed into a new Group structure
To leverage full Bord Gáis capability into Irish Water, within a Group Structure
Delivering the Government Objectives
Operational Overview:A Function Based Organisation with a Regional Presence
Irish Water will have a headquarters in Dublin and a services function in Cork will operate on the basis of three regions and 8 regional offices
3 Regions 8 Regional Offices
Eastern / Midlands Dublin CityMullingar
Connaught/Ulster CastlebarCavan Town Donegal Town
Southern Kilkenny City Limerick CityMallow
Operational Overview: Irish Water Leadership Structure
Head of Customer
Operations
Irish WaterManaging Director
Head of Asset Mgt
Head of Operations & Maintenance
Head of Capital
DeliveryHead of HR
Head of Finance
Head of Comms & Corporate Services
Chief Technical Advisor
inc Environmental Regulation
Jerry Grant Fergus Collins
Ray O’ Dwyer
Paul O’Donoghue
John Dempsey
Angela Costello
Elizabeth Arnett
Gerry Galvin
John Tierney
Operational Overview:Irish Water Brand
We value water as a precious natural resource on which the quality of life depends.
Through responsible stewardship, efficient management and strong partnerships, Ireland has a world-class water infrastructure that ensures secure and sustainable water services, essential for our health, our communities, the economy and the environment.
Values - by which we will live and are measured against
Responsibility Stewardship, Partnership, Inclusion, Safeguarding for the next generation
ExpertiseKnowledge, Quality, Technical excellence, Progressive, Solutions-orientated
Efficiency Responsive, Fiscal responsibility, Capital utilisation, Customer service, Delivering
Integrity Transparent, Accountable, Honest, Fair
MarkClean, robust and simple.Efficient to apply in multiple applications.Embraces Irish language
8
A Self Funding Utility
Change Attitudes & Behaviours
Towards Water
‘Effective’ Control of Assets & Operations
IRISH WATER TODAY
The aim is for Irish Water to be a self funding entity with two streams of investment over time – one from bill paying customers and the other from market funding.
CAPITAL INVESTMENT
Funding from the Markets
Customers Paying Bills
REVENUE1 2
Benefits Model:Irish Water – A Self Funding Utility
10
Asset Strategy & Sustainability
ManagerIW1/053
JOHN CASEY
Asset Programmes ManagerIW1/054
SEAN LAFFEY
Head of Asset Management
IW1/057JERRY GRANT
1 1
Sustainability Policy & Innovation Lead
IW1/001MARK O’CALLAGHAN
Water Supply Strategy Lead
IW1/002MARK MCAULEY
Wastewater & Sludge Strategy Lead
IW1/003GERRY O’DONOGHUE
Asset Information Lead
IW1/004LAR SPAIN
Water Capital Programme Lead
IW1/007MARTIN MURRAY
Wastewater Capital Programme Lead
IW1/008MICHAEL TINSLEY
Contract Strategy LeadIW1/009
LIAM DOYLE
Connections & Developer Services
LeadIW1/010
CAROLINE GREENE
Minor Programmes Lead
IW1/011GEOFF O’SULLIVAN
Risk Management SpecialistIW1/012
VICTOR VAN DER WALT
Risk Management Analyst
IW1/067
Technical Standards SpecialistIW1/013
LIAM MURRAY
Sustainability Policy Specialist IW1/014KAREN GALLAGHER
Sustainability Policy Officer
IW1/015
Environmental Policy & License Support
SpecialistIW1/016
GILLIAN VAUGHAN
Environmental Policy & License Support Officer
IW1/017
Spatial Planning SpecialistIW1/018
SUZANNE DEMPSEY
Innovation & Technology Specialist IW1/075
Innovation & Technology
OfficerIW1/074
Water Treatment Strategy Specialist
IW1/019
Water Safety & Supply Quality Plans Specialist
IW1/021BEN NOONAN (S)DES JOYCE (NW)
Regional Water Conservation
SpecialistIW1/065
Wastewater Treatment Strategy
SpecialistIW1/022
EDMOND O’REILLY
Wastewater Sludge Strategy Specialist
IW1/023FIONA LANE
Wastewater Networks SpecialistIW1/066
Regional Wastewater Network Specialist
IW1/068
Data Governance & Quality Specialist
IW1/025DAVID LONERGAN
Information & Reporting Solutions Specialist
IW1/076DECLAN EUSTACE
Asset Register & Data Aggregation
SpecialistIW1/028
PATRICK DALY
Modelling & Long Term Planning
Specialist IW1/021
Water Treatment Programmes
SpecialistIW1/037
DIANE CARROLL
Rehabilitation & Leakage Programmes Soecialist
IW1/038ADRIAN GNANASEGARAN
Rehabilitation Leakage Programmes
Regional LeadIW1/063
Networks Programmes
SpecialistIW1/040
OLIVE MARSHALLMARK MURRAY
Wastewater Networks
Programmes Regional Lead
IW1/062ESTHER WHITE
Wastewater Treatment Programmes Specialist
IW1/039GARY GIBSONPAUL FALLON
Wastewater Treatment
Programmes Regional Lead
IW1/079JOSEPH KENNEDY(S)
Commercial SpecialistIW1/061
Performance SpecialistIW1/041
Commercial SpecialistIW1/061
DENISE TREACY
Connections Policy & Standards Specialist
IW1/042TADGH O’CONNOR
Energy and Efficiency Specialist – Minor
ProgrammesIW1/047
WILLIE MOYNIHAN
Energy and Efficiency Specialist – Minor
ProgrammesIW1/047
Minor Programmes SpecialistIW1/048
TBC (EAST)LAURA HENEGAN (N/
W)PAUL CREMIN (S)
Water Supplies Specialist – Minor
ProgrammesIW1/045
JOHN HYNES
Waste Water Services Specialist – Minor
ProgrammesIW1/046
CAROLINE O’REILLY
1 11 1 11 111
1
2
1
1
1
1
2
2
1
1
1p.r
1p.r
1
1p.r
2
1
1 1
1
1
1p.r1p.r
2p.r
2
2
1
1
1
1
1
1
11
1p.rWater Treatment Programmes
Regional LeadIW1/064
GERARD O’DONNELL
1p.r
OPEX Business Planning Strategy
SpecialistIW1/070
1 OPEX Business Planning SpecialistIW1/071
1
Data Governance & Quality Analyst
IW1/026DARRAGH O’ROURKE
2
Metering Technology & Solutions Lead
IW1/072
1Regional Sustainability & Environment Specialist
IW1/069ANTHONY HICKEY(S)
MARTINA DUIGNAN (EM)
1p.r
Water Conservation Strategy Specialist
IW1/020KATE GANNON 1
Regional Wastewater
Treatment Specialist IW1/024
KEN CONROY (S)THOMAS SHRAYNE
(N/W)DARA WHITE (E)
1p.r
Information & Reporting Solutions Analyst
IW1/027JOE SHIELS
1
Asset Register & Data Aggregation – GIS
AnalystIW1/029
KELLY BRADYRONAN O’SHEASEAN MINOGUE SANDRA NESTOR
Modelling & Long Term Planning – Water Analyst
IW1/032ADRIAN MULLINSSHANE BOWDEN
Asset Register & Data Aggregation – Maximo Analyst
IW1/030FIONA MEEHAN
25
Modelling & Long Term Planning –
WasteWater Analyst IW1/033
21
ICA SpecialistIW1/077
1
Business Solutions Delivery Manager
IW1/050SUSAN CLERY
1
Information & Reporting Solutions
AnalystIW1/027
5 p.r.
9
Asset Investments ManagerIW1/055
JOHN PRENDEVILLE
1
WIAC Governance Lead
IW1/090VERONICA
HARRINGTON
Investment Portfolio Management Lead
IW1/006NIALL TUKE
Post Investment Review Lead
IW1/056PADRAIC FOGARTY
Investment Approvals Specialist
IW1/005JIMMY SHERIDAN
IAC Approvals Officer
IW1/036MARIE LAWLOR
Portfolio Management
SpecialistIW1/034
THOMAS MURPHY
Portfolio Management SpecialistIW1/034
PATRYCJA POGODA
Portfolio Management SpecialistIW1/034
MARK CONATY
1 1 1
1
1
1
1
1
Programme Analyst
IW1/035
1
Programme Analyst
IW1/035
1
Programme AnalystIW1/035
MATTHEW MCCONNELL
1
Greater Dublin Area New Connections
LeadIW1/044
OLIVER FOGARTY
1
Senior Design Engineers
MARTIN MCGRATHBRIAN O’LEARY
BRIAN DAY
Connaught/Ulster Region New
connections LeadIW1/044
SEAMUS LEE
Design EngineersIW1/058
COLIN CUNNINGHAMFERGAL MCGREAL
NIALL KINSELLA
Southern Region New Connections Lead
IW1/044CATHERINE SHERIDAN
Eastern/Midlands Region New
Connections LeadIW1/044
JOHN O’SHAUGHNESSY
1
1
36
1
.
Central Role
Regional
Central / Regional Role
Not applicable for time period
Legend
Ultimate distribution to be determined
Field EngineersIW1/059
1p.r
Water Resources Strategy Specialist
IW1/019ANGELA RYAN
1
Asset Management Function
…within a new Regulatory Landscape…
BalanceSustainability
Objectives
Environmental Protection
Customer Service &
Affordability
Employment & Growth
Future Water Services Regulation
IW +
LA
CER
DECLG
EPA
HSE
HSA
11
…to build a sustainable water service
Asset Management Approach
Development of Investment Programmes
SUSTAINABILITYKey Investment Drivers
12
Building a Sustainable Water Service:Asset Management Approach
Will drive Investment Planning based on asset data and defined needs Relies on full Asset data including Operations workflow & costs Makes optimum use of available resources Ensures the right projects are selected and delivered in the right way Promotes best use of existing assets – capacity & risk models Balances Capital & Operational investment – whole life view Promotes a consistent set of policies & standards across asset base Supports a sustainable business model-present & future needs Promotes risk management as a key focus to target investment
13
Asset Management will drive both operational & capital investment based on sustainability principles
Building a Sustainable Water Service:Funding and Investment Drivers
Drinking Water Quality
Drinking Water Availability
Environmental Compliance
Wastewater Availability
Meeting Customer Service Obligations
Business Efficiencies
Asset Condition & Performance
Enhancement
Enhancement / Growth
Enhancement
Enhancement / Growth
Enhancement
Enhancement
Capital Maintenance
14
Building a Sustainable Water Service:Development of Investment Programmes
Irish Water Strategic Investment Plans
Financial Regulator - CER
DECLG
Water Services Strategic Plan (25 Year)
Price Control Period – Investment Plans (6 Year)Capital• Major Projects• Small Capital• New Connections/Developer Services • Surveys & Studies
Stakeholders: LA’s, Regional Authorities, Customers/Citizens
Environmental Regulator - EPA
• WSPP sets out high level strategic objectives including alignment with Economic and Spatial Plans
• Will be required by legislation
• Will require Ministerial approval
This will inform / be supported by Specific Strategies:• Water Resources Management Plan• Climate Change and Adaption Strategy
15
• 6 Year Investment plans approved by CER
• First full regulatory period 2016 – 2021
• Interim Investment Period 2014 - 2015
Building a Sustainable Water Service:Planning Overview
BGE
CER
EPA
DECLG LA5 Year & Annual
Service Plan•Operations & maintenance•Improvement initiatives
• Service Objectives• Service Requirements• Budget • KPIs • Service Levels
Irish Water & Local Authority Collaboration
[5] Year Strategic Plan & Budget
25 Year Water Services
Investment Plan
Irish Water
Stakeholders
Delivery Against Agreed Service Plan
Local Authorities
Customers
16
Business Impacts for ACEI Members
• Novation of Contracts to IW– Documentation of contract terms– Potential scope changes– Continued day to day relationship with LA Capital
Offices reporting to IW AM/CD– Consultant frameworks for most new work– Contractor Frameworks & revised contracts– Drive for efficiencies and value – Regulator role in all capital– New Connections Policy & Workload
17
Current strategic views - Examples
• DBO Contracts retained with shorter terms• Asset Strategy determining priorities & approach• Water Conservation Plan – evolving integrated strategic
approach• Load management – focus on s.16 licensing & Fogs• Water Quality – the top priority with risk focus• ECJ key driver of wastewater investment• Need to do more for less – use existing assets• Integrity of the budgeting process – risks costed• WSSP Plan – 25 years view to be developed in 2014• Major challenges in Dublin water & wastewater services
18
Summary Introduction
• New way of doing business• Asset Management • Capital Delivery (Fergus Collins)• Major Projects (John Barry)• Asset Management Focus
– Strategy (John Casey)– Investments ( John Prendeville)– Programmes (Sean Laffey)– Business Systems (Susan Cleary)
19
Asset Strategy and Sustainability
John Casey
3rd April 2014
Asset Strategy & Sustainability
GIS – Water Network
23
Water: Compliance Challenge
• EPA Remedial Action List
• EPA Notifications
• EPA Directions
• EPA Audit reports
Notification RAL BWN Direction0
50
100
150
200
250
300
350
400
450
385
140
31 22
Active Non-Compliance (Approx. Number)
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• 41% UFW (LGMA 2012)
• 25% of WSZs are currently operating beyond their design limits
• Lack of basic infrastructure and resources to manage leakage:
– DMA setup not complete
– Inconsistent and inadequate resourcing of active leakage control
– Visibility of DMA performance
• Customer Side Leakage
– Metering programme providing new data source (>140K meters
installed)
– 5-6% of properties experiencing significant leaks
– First fix policy under consideration
– Dual benefit in terms of lead non-compliance
• Rehabilitation contracts on-going
Water: Availability Challenge
25
Waste Water: Compliance Challenge
• Licenced Discharges
• 76% of larger urban areas complied with secondary standards in 2012
• Lower compliance rates for N and P
• EPA Prosecutions (Clifden, Killybegs, Bundoran)
• ECJ Prosecution under UWWT Directive
• 70 UWWT WWTPs
• 39 Collection Networks
• Major Data Challenge
• Water Framework Directive requiring Good Status by 2015 (with potential to extend to 2021/2027)
• Requires potential investment of €3 - 4 billion
• New EPA licences being issued based on current 2015 WFD commitments
• Higher standards required under Habitats Directive
• E.g. Blackwater Valley
Approach to Investment Planning – Enduring
Irish Water Programme26
Assess Current Performance &
Risk
Future Needs
AnalysisGap Analysis
Define and Optimise Projects
Finalise Investment
Plan ( 6 year )
• Asset Management
• Capex• Opex• Small Capital• Bundling
• Drivers Prioritisation• Cost Benefit Analysis
Submission to CER
• Regional and LA consultation• EPA Engagement
• Previous Approach • Future Approach• WSIP high investment on relatively
small number of schemes including high growth provision
• Under-investment on large number of schemes
• Under-investment in capital maintenance
• All schemes considered for investment
• Greater spread through small capital / more targeted investment
• Growth provision “just in time”
• Benefits of standardisation and innovation
IW Future Process
Investment Planning Process 2014 – 2016
27
Project Sources• WSIP• RAL• AER• Small Capital• Strategic Studies
Drivers Prioritisation
Project Decision Trees• First stage filter
Project WSIP Readiness+ WSIP in-flight Potential cashflow
Investment Need by DriverProject list to be prioritised
Interim Price Control Submission Q2 2014
Further Cost Benefit Analysis and Prioritisation of Projects
Finalise 2014 – 16 Investment Plan against Drivers and Funding constraints
Ongoing engagement with the EPA to maximise environmental benefit within funding constraint
28
Capital Investment Required
• Need to ramp up investment from current approx. €300m to address
compliance, capacity and capital maintenance deficits.
• Need to develop pipeline for 2016+.
2014 2015 2016
Available Capital Capital Requirement
Capi
tal I
nves
tmen
t
Review Project Scope
• Population & Demand Projections• Asset Management Principles?• Asset Management Requirements• Interim measures?
– Accelerate Compliance– Defer Major Capital where appropriate
30
Urban Waste Water Compliance Strategy
• Minor Capital Quick Wins
• ECJ Response
– Engagement with DECLG and EU towards Partnership Implementation Agreement
– Deliver Major Capital Projects
– Collect appropriate data
– Roadmap for Compliance
• WFD Engagement
– Engagement with EPA/ DECLG/ NPWS
– Development of Catchment Modelling Capability
– Collaboration on River Basin Planning and Licencing approach
31
Minor Capital Programme Example – Quick Wins
• Plants that failed UWWD Standards in
2011-2012 which are not overloaded
• 47 No. WWTP
• Systematic bottom up data collection and
analysis
• Installation of appropriate monitoring
• Steps
– Operational assessment and resolve if
possible
– Optimise and deliver minor capital solution
– Confirm benefits delivered
• Estimated cost €3 million to bring 40
WWTP into compliance
John Prendeville
3rd April, 2014
Asset Investments
Introduction
• Facilitate Investment Governance of Capital Programmes
• Manage the investment approval process
• Record Investment Decision making & basis
• Manage the Portfolio of Capital Investments
• Develop & apply economic investment prioritisation rules
relative to business objectives
• Assess budgets & ensure alignment with regulatory
targets
• Conduct post investment reviews to enable process
refinement
• Record Investment Benefit tracking & assessment
33
Investment Governance
Portfolio Optimisation
Post Investment Review
Water Investment Approval Committee (WIAC)Governance Objectives
• Governance of the Capital Investment Programme
• Rigorous appraisal of project options, demonstrating that the selected option
will deliver best value
• Tracking of budget variances to inform early stage decisions
• Approve revisions to Approved Capital Investment Programmes through
reallocation of capital budgets and the identification of risk
• Provide timely and appropriate reporting on Capital Investment Programme
to meet Regulatory requirements
• Recording and tracking of Investment decisions & expenditure
34
● Ultimate responsibility for the Irish Water Capital Asset Investment Strategy, Asset Programme Development, Asset risk strategy and performance.
● The Committee will take into account the legitimate interests of shareholders, customers and other relevant stakeholders.
● The committee will have the authority to approve investment decisions for Irish Water within the Capital Project Authority level and other specific delegated authority approved by the Board.
Structure – Water Investment Approval Committee (WIAC)
Assigned by Irish Water MD
Head(s) of Asset Management, Finance, Operations, Capital Delivery & CTO
Ensure best practice governance is applied to the approval of Irish Water Investment expenditures and the realisation of expected benefits
Members
Terms of Reference
Purpose
Internal Approval Path
Group Investment Approval Committee(GIAC)
Water Investment Approval Committee(WIAC)Project Mgr (PM)
Irish Water Board
PM & AM
PM, AM & MD
BGE Group BoardPM, AM, MD & CEO
Phases and Gates in Investment Approvals Process
Business Planning
Cycle
25 Year Strategy
6 Year Business Plan
Approved by
Board
Gate 1
Concept Design and
Business Case
Releases projects and programmes for delivery
Approved by
Board / WIAC
Gate 2
Detailed Design and Procureme
nt
Review and
challenge options
Approved by
Board / WIAC
Gate 3
Delivery/ Construct
ion
Accept Design
and Tender
Approved by
Board / WIAC
Gate 4
Project Closure
Confirm Investment Need and Regulatory
Output delivered
Approved by
Board / WIAC
Gate 5
Post Investment Review
Confirm benefits
and Regulatory
Outputs
Approved by
Board / WIAC
37
Mapping of Old and New Regimes
38
Adding Value to Asset Investment Process
• Developing & Facilitating ACEI & water utility engagement
• Input to IW Assets Framework
• Knowledge sharing, innovation & best practice
• Shared strategic objectives; Delivering Efficiency, how to achieve savings
outcomes & value, technical, delivery options, risk reduction, service
improvements
• Shape/ adapt future Supply Chain in response to IW Challenges & step
change in industry
• Understand Key Investment Drivers – Regulatory Contract
39
40
The role of the economic regulator is to protect customers and ensure the business can be financed…
Irish Water Programme
In general the key responsibilities for regulatory authorities are to:
1. Set performance targets and associated incentive schemes
2. Approve the expenditure required to achieve those targets and set the required level of efficiency
3. Determine and set the required revenue recovery (and the associated tariff)
4. Review the effectiveness of expenditure over the period
5. Mandate the introduction of customer complaint processes and act as the final arbiter in customer disputes
41
There are wide reaching advantages of the transition to an economic regulatory regime…
Irish Water Programme
Key Change Description Advantage Summary
1. Comprehensive and consistent performance targets
• Implementation of independently set and comprehensive performance targets with associated incentives for under/over performance
• Incentivises the prioritisation of opex and capex works to minimise risk and impact to key performance targets and customers
• Clear, consistent and independent prioritisation criteria/process minimises political influence
2. Efficiency and incentive schemes
• Implementation of year-on-year opex efficiency targets (the ‘x-factor’) to drive down operating spend
• Specific incentive schemes for outperformance in opex and capex
• Supports the delivery of opex and capex efficiencies – either ‘doing the same for less’ or ‘doing less for less’
• These efficiencies result in lower bills for consumers
3. RAB based revenue model
• Introduction of a cost recovery model where revenues are directly linked to the level of system investment
• Provides a direct mechanism for return on investment creating an appetite for investment in the business and the projects delivering regulatory outcomes
4. Regulatory tariffs • Widening of charging to domestic customers• Implementation of a standardised tariffing regime
• Ensures sufficient funds are available to cover the required operational expenditure
• Provides the scale and stability of income to support access to the capital markets (safeguards funding for capital works)
5. Price control period • Reviewing costs over a 5 to 6 -year price control period
• Greater certainty over the schedules of work within the 5 to 6 year period supporting a reduction in procurement costs in opex and capex
6. Customer codes • Mandating and approving customer codes of practice (e.g. for complaints)
• Acting as the final arbiter in customer disputes
• Improves consumer confidence and satisfaction
42
Asset Programmes
Sean Laffey
3rd April 2014
43
Asset Programmes Brief:
• Define the asset delivery programmes following direction from Strategy
• Manage the delivery of project design delivery and WIAC approvals
• Oversee the execution of asset delivery programmes
• Ensure effective capital spend and change governance
• Develop sourcing and contract strategies
• Manage the planning and approval of minor works programmes
• Manage policy and processes for new connections and new build asset adoption
• Lead initiatives for optimisation of Energy & Efficiency across the asset base
• Work closely with the LA CaPO in the delivery of all capital programmes, major and
minor
44
Asset Programme Structure
Head of Asset Management
Asset Strategy & Sustainability Manager
Sustainability & innovation Lead
Water Supply Strategy Lead
Waste Water Strategy Lead
Asset Information Lead
Asset Investments Manager
WIAC Governance Lead
Investment Portfolio Management Lead
Post Investment Review Lead
Asset Programmes Manager
Water Capital Programme Lead
Waste Water Capital Programme Lead
Contract Strategy Lead
Connections & Developer Services Lead
Minor Programmes Lead
45
Water Capital Programme Structure
46
Waste Water Capital Programme Structure
47
Water/Wastewater Capital Programme:
• Responsible for the management and delivery of the major water/wastewater capital
programme
• Programme need identified through asset strategy - drivers include RAL, water quality
and availability, WFT, UWWD limits
• Capital staff cover gates 1 to 4 inclusive, Capital Delivery cover Gate 3
• Manages delivery of project design, oversees construction phase and close out
• Manages all submissions to WIAC
• Links with HSQE on PSDP and PSCS
• Approves all payments for all stages of a projects
• Works with the LA capital projects office to ensure delivery of capital programme
• Ensures compliance with IW procurement strategies
• Oversees and justifies changes in scope, timescale or output for major water projects
48
Minor Capital Programme Structure
49
Minor Capital Programme:
• Responsible for defining the minor capital programmes including water quality,
environmental compliance, energy and efficiency, process optimisation etc.
• To provide oversight of performance through the CaPO, ensuring it meets all
business requirements for HSQE, cost, time & outcomes.
• To prepare and submit papers to WIAC for financial approval.
• To approve changes to the scope, timescale or outputs from Minor Works.
• To ensure that procurement routes comply with Irish Water’s processes and
procedures.
• Work closely with O&M and the LA Capital Offices to develop and deliver the minor
programmes
50
Contract Strategy Structure
51
Contract Strategy:
• Overall responsibility for the management of contract delivery and vendor
performance across the capital programme
• Overall responsibility for procurement strategy and review of tenders
• Provides the interface with legal specialists on contractual procurement issues
• Assists in the development and implementation of new contract types– To be Design-Build - contractor takes responsibility for delivery (e.g. responsible for pipeline route selection
on the ground) ¤ – Basis for award of contract: use MEAT proactively so that lowest price does not necessarily get the job -
promote change in market on new IW contracts– Risk balance: adequate site investigation prior to contract pricing; option to offer more SI during the tender
phase for certain contracts where ground conditions merit this– Pricing document: would not be granular like CESMM B of Q but would still give breakdown (over the area
of the site and on temporal aspects too [e.g. can't work in race week])– Contractor to record all new assets for IW in line with IW's GIS standards;– Contractor to meet KPIs in each contract
Proposed Frameworks
FrameworkComment on Current Status
Name Type
12/085 - Engineering & Technical Services (2 Lots) National Framework establishment imminent (Alcatel letters issued on 14/3/'14)
13/098 - Minor Civil Engineering Works (5 Lots)National, sub-divided into districts (34)
At tender evaluation stage
13/101 - Minor MEICA Works (5 Lots)National, sub-divided into 3
RegionsAt tender evaluation stage
13/115 - Network Services and Rehabilitation Works (6 Lots)National, sub-divided into 3
regionsPQQ evaluation almost complete
13/112 -- Major Civil Engineering Works incorporating associated MEICA Works (2 Lots)
National, sub-divided into 3
RegionsPQQ Stage being completed. Next stage ON HOLD pending Framework
Agreement.
13/113 - Major Process & MEICA Works incorporating associated Civil Works (2 Lots)
National, sub-divided into 3
RegionsPQQ Stage being completed. Next stage ON HOLD pending Framework
Agreement.
14/001 - Investigative Works (5 Lots)National, Sub-divided into 3
regionsPQQ evaluation almost complete
53
New Connections Structure
54
Connections and Developer Services:
• Overall responsibility for the end to end management of the new connection
processes
• Progression of assessment, modelling, design, inspection and estimation of new
connections across all regions
• Development and promotion of IW new connection processes and standards via
regional connection teams
• Key contact for substantial new connections
• Implementation of new process and procedures
• Contributes to future planning and demand forecasting
55
Potential Issues
• Relationship with the Capital Offices of the Local Authorities
• Appointments of Consultants from Gates 1 to 5 as a single contract will be the
exception
• Consultants will be utilised more in gathering and analysing data to allow IW
investment decision making
• New Connections will have a need for Consultants as will those connecting
• Minor Programmes will require Consultant input
• Only IW can authorise additional spend on a consultancy contract
• IW will be the contracting party for consultancy and construction contracts.
Implications for the role of the Capital Office
• CD will be responsible for payment of Consultants Gate 3
Procurement Optimisation: Flexible Buying
Martin Acton
3 April 2014
Martin Acton
• Procurement and category management lead for IW retail.
Confidential and commercially sensitive57
Personal aim is buy in a Flexible manner, taking advantage of Procurement Regulations to minimise the cost to provide goods and services to IW and
become the Customer of Choice
We are at the start of the process of understanding the spend and we are looking to engage all elements of the market over the short medium and long term
To cover
• Major changes for IW
• How IW will buy goods and services
• Principles of procurement• Key changes for engineering• What's next• Any questions
Confidential and commercially sensitive58
Major changes and what it means
Confidential and commercially sensitive59
For non-major projects Local Authorities will remain the
operational point of contact but procurement activity will be led
out of Irish Water
EU thresholds will dictate the process followed by Irish Water
in procurement
All spend will be reviewed to understand the opportunities to
deliver better value
Moving from 34 procurement and purchasing entities to a single procurement entity with 34 purchasing regions.
Compliance with EU Utilities Directive 2004/17/EC
We have to deliver goods and services more efficiently on behalf of customers
How we will buy products and services
• Introduction of Portfolio & Category Management approach across the Local Authorities
• Increased engagement with the market before, during and outside of the tender processes with dedicated Category Managers
• Simplify the buying channels to increase transparency and decrease the risk premium on project - frameworks
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LA 1 LA 2 LA x
Chemicals
Energy
Category Z
Local Authorities
Spen
d ca
tego
ries
Supplier Relationship Management
Major projects
Central
Our approach – Public procurement rules with a focus on……
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Efficiency
The way new contracts are procured should realise the efficiency that a single water utility can provide. The cost of procurement should reflect the value of works being procured
Relationship • The Procurement Strategy
should foster a fair working relationship between Suppliers and Irish Water
• The Procurement Process should promote the transparent management and pricing of risk
• Past behaviour should form part of future assessment
Price
The Procurement Process should promote sustainable and cost-effective pricing – (MEAT)
Supply Chain
A strong supply chain needs to be maintained to ensure the sustainability of services being provided by Irish Water
Market
The works being procured should be targeted at district, regional and national level to reflect the value of work and size of the market
HSQE
The procurement process should incorporate the health, safety, quality and environmental standards required by Irish Water
Contract Processes – Delivery Methods
IW follow the Utilities Regulations where the value of a contract is expected to be equal to or in excess of:
– €414,000 for Goods/Services– €5,186,000 for Works Contracts
For contracts below the thresholds, IW adopts the process as follows:– Less than €50,000 up to three quotes– €50,000 to €211,000 up to 5 quotes– €200,000 to €414,000
• For certain materials approved suppliers may be used
Utilising Framework Agreement– IW intend to continue with the establishment of a number of Framework
agreement across a number of categories– A number of tenders have been issued to date and a number will follow
in due course
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Key contractual changes:
• Rigorous approach to contract design and management– Evaluation existing contracts forms such as FIDIC – Taking advantage of lessons learnt across the portfolio– Selecting Contracting Vehicle to suit the requirement
• Focus on in-life contract management and contract compliance
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What’s next
• We are – Developing a coherent picture of the Irish Water spend– Looking to understand the suppliers in the categories and
geographies– Logging supplier details within our systems
• We will– Return to the market with a clear picture of what we intend
to do – Gather feedback on what we can do to improve
relationships with service providers
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Any questions
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Irish Water Capital Delivery Team responsible for:
• Delivery of CIP, post Gate 3• Pre-certification agreement of Interim Accounts• Approval of consultants payments, post Gate 3• Appointment and oversight of RE staff• Processing and Approval of Change Orders (incl. value
engineering proposals)• Approval of Final Accounts including dispute resolution• Scheme close-out, handover to Asset Management and
Operations
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