The Water Act 2014 extended Ofwat’s primary duties to include furthering the long-term resilience of water and wastewater services. Always important in maintaining the delivery of water and wastewater services, in PR19 (Price Review 2019) resilience in the round has been highly prominent in the water company’s thinking and business plans. This article seeks to place the resilience of physical infrastructure and associated capital works in the wider context of ‘resilience in the round’ and, in particular, looks at the impact of this evolution on contractors and product manufacturers and the contribution they can make.
Resilience in the round
The definition of resilience referenced by Ofwat 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 three different spheres of resilience – ‘resilience in the round’ – are corporate, financial and operational. Clearly, all three are closely linked and fundamental to a water company’s business model. If a water company’s reputation is damaged by, for example, a pollution incident, it may find it harder or more expensive to raise finance which in turn will impact on its ability to fund physical infrastructure projects such as new pipelines, reservoirs and treatment works.
Six capitals and 4Rs
Taking Anglian Water as an example, their business model embraces, ‘…an integrated systems approach to resilience, considering the needs of our customers, stakeholders and the environment’. Anglian references the 4Rs and six capitals in their systems thinking and resilience reporting.
The six capitals emphasize the different kinds of capital an organisation relies on to survive and thrive. They are often referred to as financial, manufactured, human, social/relationships, intellectual and natural. A major resilience project draws on financial, manufactured (construction) and human capital and impacts on ecosystems whose building blocks are natural capital such as geology, flora, fauna, soil and water.
Resilience – the ability to withstand shocks and stresses - can be modelled as ‘Risk x 4Rs’. Risk takes into account the scale and duration of impact of any shock or stress, the likelihood it will occur, and the vulnerability of the organisation. The 4Rs are, in effect, factors that mitigate the risk. The 4Rs of resilience are Resistance, Reliability, Redundancy and Response/Recovery. Increasing capacity, creating alternative sources of supply, ensuring system reliability and building in control mechanisms are just some of the ways water companies can increase network resilience.