PA advises water clients around the world in the design and implementation of water asset management plans and processes to deliver increased shareholder value and enhanced levels of service to their customers. We can help achieve excellence in asset management today, but also build a leading service model for the future.
PA has a framework of services focused on delivering excellence in asset management through three key service areas:
- Developing utility business models and strategy
- Designing asset investment policy
- Delivering asset performance.
The need for excellence in all three roles
Because the three key roles in asset management are widely recognized (owner, manager and service provider), the traditional umbrella service models are no longer the only or best way to operate effectively. The conflicting pressures in a regulated and competitive environment mean a disaggregated model can be attractive. Many pioneers are experimenting successfully in creating virtual organizations, which overcome traditional barriers. Asset-based utilities need to find the right model and ensure they have the skills to make it happen. In order to remain competitive, utilities must understand how to get the best performance from service providers, manage the relationships and get the right level of activity bundling.
The asset management challenge
Infrastructure replacement, capital investments for growth, increased revenue standards and efficiency all compete for investment. Creating and implementing an optimized investment policy requires both an understanding of the bigger investment picture tied to detailed plans for targeting investment. There is a substantial cost associated with obtaining data on the condition and reinvestment needs of extensive, dispersed and often buried utility network infrastructure. Even when such data is available, it is difficult to determine the best way to analyze it to establish an optimal expenditure plan.
Investor and market pressures demand bottom line gains
Many organizations recognize that an integrated asset management approach can reduce costs and improve performance, but they are unsure how to implement such an approach. A large amount of capital and operational costs can be attributed to internal processes such as procurement and the poor utilization of asset knowledge. The business-to-customer relationship is often a primary concern even at the risk of neglecting more appropriate investment and the significant bottom line gains from business to business processes and internal efficiencies.
Track record
Re-engineering of the asset management business at a UK utility
This asset-management-based UK utility was forced to fundamentally rethink the way it operated in response to severe cuts in revenue following the Regulator's Price Review. The challenge was to radically re-engineer the business and cut more than £50 million of cash costs by 2004. PA easily exceeded this ambition.
The first phase involved researching the scale of the opportunities available, reshaping the strategic business plan to accommodate it and assembling a convincing business case. This work included innovative development of a new business model and detailed transition plan which allowed the organization to restructure its business around the asset manager-service provider model. This initial phase was followed by further support in developing the solutions ready for implementation. The project was completed well before the deadline and the client complimented PA as the best consultancy it had ever used.
Program management and forecasting improvement at Anglian Water Services
Anglian Water Services (AWS) had a large and increasing capital works program that was subject to external scrutiny and regulation by the Office of Water Services (Ofwat), the economic regulator for the water industry in England and Wales. It had proved difficult to provide reliable expenditure forecasts and to control expenditure within the tight targets agreed with Ofwat. Despite these issues, AWS had delivered its planned capital investment program successfully during recent years.
As part of a committed process of improvement, AWS wanted to improve program management and forecasting, but without major change to institutional arrangements. PA was appointed to conduct a review of capital program management and identify ways to improve management and forecasting without materially changing the prevailing institutional arrangements.
PA developed recommendations for improving AWS's effectiveness by focusing more on the driving business issues in project selection and authorization than on technical aspects. PA worked to redeploy the project evaluation unit as a higher profile program management unit with commensurate responsibility and establishing good project management practices under the direction of a project infrastructure manager.
PA's recommendations from the review were accepted and implemented by the client.
