TOTEX-based strategic asset management assessment to support Dŵr
Cymru Welsh Water’s long-term wastewater infrastructure planning
by Simon Barton, Peter Davies & Rob Lewis
provides an evidence base for identifying opportunities for
rationalising the number of WwTWs - Courtesy of Black &
investment by the regulated water sector of England and Wales is
governed by a five-yearly cycle, this investment relates to what
are long-lived assets. Decisions about when to undertake capital
investment and what to include in a capital programme have a
direct bearing on the operating costs associated with the
assets. Ultimately the decisions shape the total lifetime costs
that are passed on to customers. The significance of this is
highlighted by the shift in regulation by regulator Ofwat
towards consideration of total expenditure, or TOTEX, rather
than treating capital expenditure and operational expenditure
A recent project
undertaken by Black & Veatch for Dŵr Cymru Welsh Water (DCWW)
involved a rapid TOTEX-based assessment of options for the
utility. The aim was to provide support to DCWW’s Asset Strategy
Team for the strategic planning of its wastewater
infrastructure. More specifically, it provided the utility with
an evidence base for identifying future opportunities for
rationalising the number of wastewater treatment works it owns
DCWW currently has around
830 wastewater treatment works across a service area that is
largely rural. In total the works serve 3 million people, but
the median population equivalent served by them is less than
As with any water utility
this asset base is not static. DCWW continually has to make
decisions about how best to invest in its assets. This can
include rationalising the number of treatment works in certain
locations by diverting flows from smaller installations to
larger centralised ones.
At the end of 2015, DCWW
decided to make a fresh strategic assessment to consider any
further opportunities for rationalisation across its wastewater
asset base. As part of this exercise, it decided to inform its
strategic planning with a 40-year combined capital and
operational expenditure - TOTEX - assessment of the options.
DCWW first undertook an
internal review built on discussions with its operations team.
This identified almost 100 treatment works in 24 groups for
which DCWW then sought external input to help it identify a
shortlist of candidate schemes. This work was awarded to Black &
The key feature of this
project is that it had to deliver assessments of sufficient
detail and accuracy to support sound strategic planning, but to
do this within a short time span. This was achieved by limiting
the activity at this stage to desktop studies.
An initial contract
covered over 60 works in 14 groups in three of DCWW’s six
regions; north-west, west, and Swansea. Assessments for these
had to be completed by March 2016. A second contract overlapped
this to carry out the assessments for around 34 works in ten
groups for DCWW’s north-east, Hereford, and Cardiff regions by
The awards stemmed from
the asset management framework agreement between DCWW and Black
& Veatch. This relationship along with a considerable history of
working with the utility meant Black & Veatch was able to bring
to the project a team with a thorough understanding of DCWW’s
asset base such that it was able to make rapid assessments
appropriate for each location.
The task for each group
of treatment works was to build up a 40-year picture of the
costs associated with two basic scenarios – one of maintaining
separate works, the other of centralising treatment at one of
the works. Broadly speaking, this is to support a process of
determining where up-front capital investment in centralisation
can lead to a reduction in total expenditure in the longer term
by cutting operating costs when compared to the scenario of
keeping separate works operational.
When assessing whether
changing the status of an existing site was necessary and/or
viable a number of key criteria, or favourable conditions, were
considered. These included the following:
High operation and
maintenance costs give the opportunity for more efficient
Tight discharge permit
conditions and potential for more relaxed standards at a
Physical constraints on
expansion such as encroaching housing.
Multiple drivers for
improvement at adjacent sites - quality, growth and maintenance.
Coincident timing -
improvement schemes needed at similar times at adjacent sites.
Amenable topography -
transfers down valleys or around the coast.
No major transfer
barriers - rail or river crossings, or dense urban areas, will
increase capital cost of transfer.
Available headroom at a
receiving works - spare capacity, helpful permit headroom.
The assessment also
required anticipating the likely need for investment at each
works both for general asset maintenance and replacement and to
cope with expected changes of requirement, such as might result
from population growth or regulatory drivers for phosphorus
removal for example.
It also involved scoping
out the main components of the wastewater system that would be
needed in each case, covering treatment processes as well as
wider system components such as gravity mains, rising mains,
pumping stations, and outfalls. This therefore meant the project
involved assessing investment needs for what were typically very
site-specific arrangements as far as identifying feasible
options for pipelines to transfer flows between works is
concerned. The topography of Wales made this latter aspect
particularly challenging. Assets may be relatively close in
terms of the direct distance between them, but steep terrains
can mean pumping between them may not be economically viable.
From data to decision
This rapid delivery of
the strategic assessment necessitated the collection of data
from a wide range of sources, one of the most challenging
aspects of the project. These included investment, GIS, flow
data, and strategic growth sources, along with reports from
scientific and operational staff, and involved bringing together
data on existing infrastructure across DCWW’s operational areas.
The data gathering
involved the project team working directly with DCWW’s data
systems. This included working with DCWW’s solution target
pricing tool, in addition to which the cost of each of the
options was built up by accessing DCWW’s unit cost database.
A spreadsheet-based cost
estimation tool was also developed. This was based on the
formulae in the unit cost database. It provided a simplified
means for producing the high level costs for pumping schemes,
refurbishment, and construction of new works and for comparing
long term options. The tool was subsequently passed on to DCWW
for its own use at the end of the project.
The project team had to
be able to interpret this data effectively in order to be able
to come up with outline solutions in each case. An important
aspect of the project was therefore to agree protocols with DCWW
to allow the project team to make valid assumptions where gaps
in data existed.
Use of the DCWW data
working at this scale across the utility’s asset base and
providing input at a very strategic level represented one of the
most innovative aspects of the project. Furthermore, the
combination of identifying engineering needs and working upwards
from unit costs represents the behind-the-scenes complexity of
the rationalisation project. The aim of the project though was
to support DCWW’s strategic decision making.
To this end, key outputs
of the work were a simple graphic presentation of cumulative
TOTEX costs over a 40-year time horizon for the separate and
rationalised options in each location. These were accompanied by
a statement of the 40-year TOTEX for each option and the payback
period associated with making the additional capital expenditure
to achieve centralisation.
assessment required anticipating the need for investment
at each works Courtesy of Black & Veatch
The graphics, TOTEX
statement and payback assessment were presented in the main
deliverables of the project - a rationalisation report for each
group of treatment works assessed.
Each of the reports set
out the details of the wastewater assets in each group, the
assumptions made about future needs, the options considered, and
a recommended option for each treatment works. They collated key
information about each of the treatment works, including any
operational and performance issues. They also set out details of
any pipeline planning routes identified in this preliminary
process. The reports therefore provided the client with an
authoritative and consistent set of reference documents to
inform its future strategic planning.
The focus on TOTEX is
important given the long life of water utility assets. It builds
on previous industry practice of undertaking whole-life cost
assessments during project option evaluation. The type of
strategic assessment made for DCWW is likely to feature
increasingly as a part of utility planning.
It is important to note
though that TOTEX alone may not always determine the most
suitable option to pursue, or may not do so unless assessed
using a wider framework. For example, recommendations made in
certain instances for the DCWW project drew attention where
appropriate to options that may provide greater resilience - in
coastal locations for example. The project therefore represented
a broader input to DCWW’s strategic planning.
Use of TOTEX is likely to
develop further in the UK, especially as experience grows of
utilities in England and Wales working with Ofwat expectations
in this area. In anticipation of that, the DCWW wastewater
rehabilitation project illustrates how it is possible to work
collaboratively with a client, even utilising data directly from
their system, and how it is possible to use an asset
management-based approach to provide input to a utility’s
strategic investment planning and ultimately help achieve
overall best value for both client and customers.
and publishers would like to thank Simon Barton, Technical
Director, Peter Davies, Framework Manager, and Rob Lewis,
Principal Consultant, all with Black & Veatch, for providing
the above article for publication.