The Whole Life Disconnect
Is the UK water industry making sufficient progress towards its goal of embedding Whole Life Costing into its procurement, contracting and operating processes?
As I've written before, in order to achieve this aspiration, the industry must take on board the principles of totex (total expenditure) asset management. So, when will consumers start to benefit from the savings made by planning capital and operating expenditure as part of a single integrated budget?
These are critical questions for the water industry, and your response to them might be different depending on your perspective. To test the spectrum of views, Hydro International recently supported an industry-wide opinion survey looking at how much a totex approach is changing mindsets in the UK, and to what extent it is leading to a rexamination of operational and maintenance practices.
The results are fascinating and suggest that most insiders believe that our industry is failing to embrace a Whole Life Cost approach, despite accepting that it would encourage innovation and, in turn, drive lower operating and energy costs.
The findings of the survey, conducted in conjunction with Waterbriefing, suggest that people attribute this inertia to a resistance to change, a mindset split between capex and opex, and even a lack of consensus on what totex really means.
Nonetheless, many still see the opportunities for totex to encourage innovative approaches that can bring rewards in terms of reduced maintenance, energy reduction and better operating efficiency of equipment.
This disconnect between aspiration and practice was most clearly demonstrated in the example of attitudes to grit removal in wastewater treatment. The benefits of improved removal at the inlet works are clearly recognised, yet at the same time downstream maintenance of grit build-up is simply accepted as an inevitable burden.
Among the most striking impressions from the survey was a palpable sense of frustration that a "lowest-price-up-front" procurement model is not fit for purpose as far as achieving totex objectives is concerned. What persists, as one respondent put it, is a "race the price to the bottom" tendering process - and this is felt acutely across the supply chain.