A glass half-full? Bringing water costs down for utility customers

Mark Bullock, Balfour Beatty chief executive officer for rail and utilities, says the water sector must change its approach to drive lower costs for customers

Our water network is one of Britain’s most critical assets. In total, the network consists of over 300,000 kilometres of water pipes and their supporting infrastructure, all of which are essential in providing water to homes across the UK.

However, the water sector is facing a range of challenges from climate change and population growth to a significant skills shortage. To meet these challenges, the sector must establish practices that allow for the efficient delivery of water projects and to ensure the future stability of the water network.

In Balfour Beatty’s most recent policy paper, 'Two sides of a coin: A strong and sustainable supply chain and efficient charges for utility customers', we share 10 recommendations to address and maintain the sustainability of the industry.

With decades of experience in the sector, Balfour Beatty has witnessed the cyclical nature of the water industry and understands the trials and tribulations of a sector where relationships between some water companies and the supply chain can be transactional and adversarial.

Although there are exceptions, there is often too great a focus on low-cost bids to win work and little understanding of the output required to deliver schemes in an efficient and effective manner.

Because of this unbalanced risk and reward, the supply chain is unable to invest in innovation or skills that will consequently shape the future of the sector – uncertainty of repeat and new business limits the desire to invest in anything other than the job at hand.

In order to make waves that result in reasonable customer charges, we believe there is an overall need for a strong and sustainable supply chain. Building long-term relationships with those commissioning infrastructure projects, combined with a visible, reliable pipeline, will ensure the supply chain will be able to prioritise investing in improvements that will ultimately bring down costs to utility customers.

With security and stability and strong relationships with project commissioners, the supply chain can progress with developing skills and innovation beyond project execution. Central to the emphasis on developing and moving the industry forward, is a focus on innovation. As one of the key themes within PR19, and a key contributor to the modernisation of the sector, innovation will also be the way the sector will mitigate increases in water prices over the long term for the customer.

Having been slow to adopt new technologies in the past, the sector must go beyond its traditionally risk-averse approach towards a genuinely innovative mindset. Reducing inefficiencies and optimising existing assets with the use of the technology will ultimately save time and money – the ability to predict leaks and failures before they happen will increase overall efficiency and productivity.

Additionally, the water sector must acknowledge the skills shortage – with qualified workers moving to different sectors for higher salaries and more high-profile schemes, a change must be made. We must do more to attract talented people into the industry and demonstrate that this is an immensely fulfilling field, where those working in it have the satisfaction of seeing their work realised and providing an enduring legacy for many years.

School outreach, apprenticeships and promoting STEM careers help increase the flow of people into the sector and ultimately boosting the talent pipeline.

We acknowledge that this needs to be a collective effort and that collaboration is key. That is why we work closely with water industry clients and our supply-chain partners to encourage a long-term approach that delivers lower costs and network stability to the end-user.

The stability of the water sector is imperative to daily life across the country. To maintain its function, we must embed innovation and foster and develop industry-related skills to meet the challenges the industry is currently facing. We see the future of the industry as a glass half full, but more can be done to promote innovation, bring in more talent and ultimately safeguard utility costs for the public.