Delivering resilience – Does high level ambition match operational reality?

Steve Morris: The National Infrastructure Commission's newly-published Annual Monitoring Report 2021 is a timely reminder, if any were needed, of the importance attached to ensuring the resilience of the UK's critical national infrastructure.

Resilience is the word which is heard time and again in the water sector at the moment – from regulators, the Government, the water companies and the supply chain alike – Tier 1s down to SMEs.  It’s also not uncommon to hear it referred to in the same breath as asset health - and both are of fundamental importance.

In the face of the growing impacts of climate change, population growth and increased customer expectations, resilience is absolutely key – evidenced by the high level messages from the Government, the regulator and the senior management teams at the water companies.

But how is resilience actually being delivered on the ground – and are there any blockages or barriers in place which are somehow currently preventing the industry from maximising its full potential?

The supply chain is keen to play its part – yet it seems to me that this still continues to be an over-looked area where greater collaboration could really contribute with solutions which would help strengthen the resilience of the systems, processes and critical assets which make up the complex national water and wastewater infrastructure.

Targeting resilience at both a strategic and granular level of detail

However, in order to achieve the required level of resilience, I would argue that without looking at the granular level of detail, achieving it at the strategic level becomes much harder.

I also wonder about the extent to which the high level message is disseminated and embedded throughout an organisation – and whether it somehow gets diluted along the way as it filters down.

If a top-down approach is needed to drive the message down, then bottom-up results are necessary to demonstrate that it is having a real and measurable positive effect.

Understandably, the focus and the attention of the water companies sometimes appears to be at the top of this particular pyramid. This after all is where most of the attention is on the performance metrics and outcomes which determine how they're rewarded or penalised accordingly.

When we speak about resilience, we could describe this as the robustness of the system and its ability to respond and adapt to changes in the whole environment – from individual events in the system to larger scale events like extreme weather –in order to ensure continuity of services to meet customer demands.

Ofwat’s own definition in its Towards Resilience discussion paper is:

“Resilience is the ability to cope with, and recover from, disruption, and anticipate trends and variability in order to maintain services for people and protect the natural environment, now and in the future.”

The UK Government current guidance on resilience - Keeping the Country Running - considers resilience as the ability of assets, networks and systems to anticipate, absorb, adapt to and/or rapidly recover from a disruptive event.

Resilience in AMP7 – driven by the customer voice in PR19 and impacted by COVID in 2020?

So how is resilience being addressed in AMP7 and beyond?

It’s important to remember that resilience is now one of Ofwat’s statutory duties and one of the four benchmarks that underpinned  the PR19 process that led up to the water companies’ AMP7 Business Plans.

There was a major focus on customer engagement in PR19 – much more consultation with customers to find out what they wanted. So some of the resilience requirements e.g. uninterrupted supply, clean drinking water, reduced risk of sewer flooding – reflect the customer’s voice. They may not have been described as resilience – but that’s what they equate to.

I think the other thing here to bear in mind is the fact that the start of AMP7 coincided with the start of the COVID 19 and what the legacy of the pandemic is likely to be for the water sector in terms of resilience.

COVID has clearly had an impact on operational activities.  Just to take one example, like other companies in the supply chain, we’ve noticed a requirement to minimise the time contractors spend on site. Whether the measures the water companies have put in place to COVID-proof their activities will result in long-term behavioural changes, or whether post-pandemic they will revert to the status quo, remains to be seen.

For me, I think there will however be an undoubted legacy of the water companies seeking to build even greater resilience into their assets. I’m thinking here in particular of Design for Manufacture and Assembly (DfMA) - the use of offsite manufacturing facilities for onsite installation and more controlled onsite processes. 

The other major shift which has started to bring about transformational change is of course the increasing use of smart technologies and amount of data analysis now being undertaken. 

Vast amounts of operational data are now available compared with 5/10 years ago, which in theory should enable informed decision-making and an increased focus on putting investment spend where it is really needed.

Embedding a resilience culture -  a disconnect between theory and practice?

However, at the moment there still seems to be a disconnect between the theory and practice of embedding a resilience culture throughout the water sector.  While there’s a high level of desire that’s there when it comes to talking about resilience,  the key question is whether more could be done to strengthen  practical implementation?  

Key areas which I would suggest clearly impact on an organisation’s view of the resilience of its assets and processes and feed into this include:

• the extent to which resilience is viewed through the prism of TOTEX and whether in reality an opex versus capex approach still applies
• whether spending decisions are based on Whole Life costs
• inherent tensions which result from the ongoing misalignment of the water companies’ planning requirements and widely varying timescales

On the third point, to mention just two, are the constantly debated 5 year AMP investment cycles and the Water Resources Management Plans the water companies produce every five years setting out how they will manage water supplies in their region to meet current and future needs over a 25 year timeframe.

In my view, reconciling the inevitable short-termism behaviours, which the AMP investment cycles drive, with the complex investment planning decisions needed to meet long-term objectives does not necessarily produce the most efficient and cost-effective outcomes.

At the end of the day, the key question for the water companies charged with delivering resilient critical water and wastewater infrastructure is how to ensure resilience is driven down and embedded through their own company.  Alongside that, is how to make sure it is also embraced by other key stakeholders.  I would of course include the supply chain which plays a significant role in delivering their investment programmes.

If the ambition for resilience is there at the top, the supply chain can help realise it at operational level

Which brings me back to my original point on the importance of collaboration – if the ambition for resilience is there at the top, the supply chain can help them to realise it at an operational level.

It’s true to say that in general, operational resilience has the most immediate and visible impact on customers.

At an operational level, risks include critical asset failure or telemetry failure – and it is undoubtedly  the case that the failure of even a single asset, in the complex collection of assets, processes and systems that make up the UK’s water and wastewater infrastructure, has the potential to massively cascade into a problem with major impacts.

I’d like to suggest that the water companies should not overlook the capability and potential of the supplier to provide invaluable insights, wherever their equipment or process sits at key points of the system. What they can bring to the party is the ability to look upstream and downstream either side of that point and understand the ramifications when the system goes out of kilter, how problems can cascade at key points of failure and what the potential options are to ensure its robustness.

Water companies now have a legal duty to ‘secure long-term resilience’

Resilience is now embedded in water-related legislation for England and Wales - the water companies have a legal duty to ‘secure long-term resilience’ and Ofwat has a primary duty to enforce this.

One of the four key themes of PR19, resilience is an integral part of water companies’ functions in order to meet their statutory security of supply and service obligations.

While there are a wealth of papers and policy documents on infrastructure and resilience relevant to the sector, I’d like to conclude by flagging up two interesting papers which highlight some practical routes forward at both a regulatory and water company level to achieving greater resilience across the water sector.

Resilience metrics at company level can help to measure and manage resilience

At a company level, as part of PR19, Ofwat highlighted the resilience metrics methodology prepared by Arcadis for United Utilities AMP7 Business Plan submission as an example of good practice.

The paper proposed a risk based approach to measuring resilience with resilience metrics defined to focus on:

• the consequences of the system failing
• the  likelihood of the hazards occurring
• the vulnerability of the system to the threat
• resilience controls in place that can reduce any of the above

The paper said that at a high level, a standardised risk assessment of resilience would be beneficial as it drives the right behaviours in the customers’ interest  - such as focusing on potential service failures.

Key questions the paper suggests each water company should ask themselves include:

• In the event of a critical asset failure, what is the expected duration the system would be out of service for?
• How many times has the system failed in the last 5 years due to a critical asset failure?
• Is there a proactive maintenance and monitoring approach for the critical assets within the system?
• Is the system operated at 100% capacity for the majority of time?

At the regulatory level, a paper published by the Government Office of Science– Infrastructure Resilience- said that regulators should use their levers to promote adaptation and resilience building against value for money.

In addition, “instead of encouraging efficiency which reduces resilience, regulations should be revised to reflect future threats and allow more information-sharing and collaboration across the supply chain.”

The report recommended:

“Operators need to develop a resilience strategy which employs the principles of redundancy, resistance, reliability, response and recovery for protection against disruptions. This strategy needs to have buy-in from other stakeholders including supply chain, customers and operators …and needs to be considered at all levels of the organisations.”

“It must be understood that striving for optimisation and efficiency can compromise resilience making infrastructure brittle. Strong at impact, but catastrophic at failure. Instead, operators should aim for elastic infrastructure through sacrificing efficiency for the sake of resilience.”

Useful food for thought in both documents for all stakeholders in the UK water sector.

The supply chain stands ready to help – and given the opportunity, has the potential to bring significant added value to the water sector’s work to strengthen its resilience.

 
Further reading:

• Current UK Government guidance on resilience- Keeping the Country Running– natural hazards and infrastructure
• Ofwat- Towards Resilience discussion paper
• Ofwat - PR19 Final Determinations – Securing Long-term Resilience
• Government Office of Science Report - Infrastructure Resilience
• Arcadis report for United Utilities Measuring Resilience in the Water Industry