Outcome Delivery Incentives in water companies

Posted by Mark Thompson on August 27, 2015

Too much work, and not enough resource capacity is a common mantra across all water companies. Inevitably, some work will not get done. So what work should be done (in-house or otherwise)? What should be postponed? What should be canned?

Typically low priority routine maintenance work is not completed, but the choices are not always that straightforward:

  • Reactive Customer work or High Priority Maintenance?
  • Asset Alarm response or High Priority Maintenance?
  • Leakage Detection or Reactive Customer Work?
  • High Priority Health and Safety Inspection or Asset Alarm Response?
  • Time Constrained Inspection Activities or Reactive Customer Work?

In the distant past, local Operational Managers would make that call. The last 10-15 years have seen many water companies move to a more centralised control of work and use of scheduling tools. In either mode, at best the decisions made by Operational Managers or by the Centre were reasonably aligned to corporate strategy, business drivers and operational needs, at worst he who shouts loudest prevails!

In theory, corporate strategy and agreed business drivers should set the rules against which work and resources delivery plans are made, and form the basis for decision-making in scheduling. In pragmatic terms, how good is the alignment of corporate strategy / business drivers to day-to-day operational decisions regarding resource allocation and work prioritisation?

Ask yourself some questions:

  • Are current corporate strategies and agreed business drivers reflected in operational business plans?
  • Is the business plan used as a recurring point of reference?
  • Is the business plan monitored and updated through the year?
  • Is the business plan submitted, and then put on the shelf to gather dust?
  • Is the business plan aligned to the forward planning of work and resources? This assumes that forward planning of work and resources is in place.
  • Does your work prioritisation schema (P1, P2, P3, P4, etc), and association to types of work reflect what’s important to your business? Does all work have a relative priority?
  • Do the business rules relating to the management of resources (ring-fencing, cross-boundary / cross-process working, use of contractors) reflect business plan imperatives?
  • How confident are you that your business drivers / desired outcomes stated in your business plan are aligned to the rules set in your scheduling tool?

The commercial drivers for all water companies are many and varied, with changing demands from regulatory bodies, investors, and customers. In the AMP period just ended, water companies responded to heightened challenges relating to customer service (SIM), and also in leakage, for example. In taking a view on what work should be done in the new AMP period, along comes a potential game-changer: Outcome Delivery Incentives (ODIs). Agreed with OFWAT, the ODIs are measures with directly attributable variable financial rewards and penalties, effectively weighting the value of doing work and the value of not doing work.

Example ODIs are:

  • Compliance with Water Quality Standard
  • Durations and Interruptions of Supply
  • Leakage
  • Sewer Flooding
  • Pollution Incidents
  • Bathing Water Quality
  • Customers on Meter
  • Customer Satisfaction

These are not new measures; broadly the ODIs will not change the nature of operational work completed by water companies, but they do force a re-think on what work is most important, and what work should be ring-fenced / prioritised. There are many factors that determine the priority of work: health & safety, asset status, and risk for example. ODIs add another layer of complexity (or focus, whichever way you see it).

The immediate challenge is to understand the ODIs, alongside other business imperatives, and translate this into detail that underpins decision making for Planners, Schedulers, and Operational Managers in determining what work gets done by who.

This means:

  • A clear work prioritisation schema
  • Published business rules available to all
  • Updates to planning and scheduling systems (includes schedule optimisation and automation)
  • Constant review regards plan / outcome achievement

Working with many water companies, at Leadent, we have seen at first-hand the challenges articulated in this blog. Taking a full perspective of technology, process and people, we work with our clients, across all industries to ensure job and workforce management solutions are set-up optimally, aligned to the current needs of the business.

Are your Outcome Delivery Incentives, or equivalent, pragmatically reflected in the way you manage your field-based operations?