Transcript Document

Water Services Training Group
14th Annual Conference
New Decade – New Challenges
9th September 2010
New Decade - New Challenges
Annual Conference September 2010
WSIP 2010-2012
Implementation
Maria Graham
Principal Officer
Water Services Investment Section,
DoEHLG
New Decade - New Challenges
Annual Conference September 2010
Key features of WSIP 2010-2012
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Scale of Programme
 €1 billion underway
 €1.8 billion contracts to
commence (340
contracts)
 190 schemes in planning
Presented in River Basin
District format
Focus on contracts in
medium term
Integration of water
conservation - €321m
contracts to commence
Annual Review
Framing the priorities for 2010-2012
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Setting programme priorities
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Water conservation
Environmental objectives
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ECJ judgments
Environmental & public health compliance
Economic objectives – works to support sustainable
development of hubs and gateways & strategically located
areas & employment creation in line with Smart Economy
report
Assessment process
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Assessment by Water Services Authorities of projects not
substantially advanced in 2007-2009 period against these
priorities.
Subsequent evaluation by Department.
Key inputs…
Assessment of Need
River Basin
Management
Plans: priorities
EPA – Drinking water,
Urban Waste Water Reports
Work on RAL and waste
water priorities
for first cycle
Forfas Reports –
WSIP 2010-2012
NSS/
Developing areas
Enterprise
needs of
Gateways and Hubs
Freshwater Pearl
Mussels Plans
Shellfish
Pollution
Reduction Plans
Schemes/contracts excluded
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Did not rate sufficiently highly as contract/scheme…
 Did not feature highly on public health/
environmental grounds
 Involved plans for water supply capacity increases
not justified by immediate economic need or
progress on water conservation;
 Involved plans for increased waste water treatment
capacity not reflected in waste water treatment
priorities in first cycle of river basin management
plans or other environmental priorities;
 Scope of proposal impacting on affordability;
WSIP 2010-2012
Value of Contracts to commence 2010-2012 by investment type
Water conservation
17%
Water
44%
Waste Water
56%
Water Supply (RAL)
15%
Water Supply other
12%
Water conservation
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Water Supply (RAL)
Water Supply other
Waste Water
€1.8 billion of contracts to commence
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Waste Water Infrastructure - €1 billion
Water Supply Infrastructure - €800m
Infrastructure Investment priorities
2010-2016
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Published by Dept of Finance in July 2010
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Water Services - Almost €3.5 billion in Exchequer
resources over the period 2010-2016
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Report acknowledges progress made – but focuses on
future issues –
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satisfying demand in critical centres for industrial &
commercial development to aid recovery;
tackling high levels of unaccounted for water and
achieving full compliance with directives.
New Decade - New Challenges
Annual Conference September 2010
Infrastructure Investment priorities
2010-2016
Water Services Investment - Exchequer Capital
4,000
3,500
3,000
€m
2,500
2,000
1,500
1,000
500
0
2003-09
2010-16 (projected)
“The new funding level will amount to a very substantial sum in real terms, given reduced
tender prices..” Infrastructure Investment Priorities 2010-2016 (D/Finance- July 2010)
New Decade - New Challenges
Annual Conference September 2010
Infrastructure Investment priorities–
Anticipated outcomes by 2016
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Make “major in-roads” in addressing deficiencies in
water infrastructure particularly in hubs & gateways;
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100% compliance with Urban Waste Water Directive –
(from 2009 base of 92%);
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100% compliance with drinking water standards;
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Average level of unaccounted for water to be reduced
from 43% to 33%
New Decade - New Challenges
Annual Conference September 2010
Local authority financing (1)
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Measures to address changed financial
climate
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Alignment of WSIP 2010-2012 with available resources
EPA Remedial Action List (RAL) – water pricing deferred to
later contracts to facilitate early delivery
Mechanism for dealing with sunk costs on discontinued
schemes (Circular L4/10)
Additional resources being devoted to final accounts in 2010
Borrowing
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Approved allocations of €144m in 2010
Allocations sufficient to cover demands for completed works &
works in progress
New Decade - New Challenges
Annual Conference September 2010
Local authority financing (2)
Achieving a sustainable funding mix
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RAL – generally 100% funding
Water conservation – generally 90% funding
Other contracts/schemes – need to ensure
appropriate project scope and avail of
beneficial market conditions
Continue to work with CCMA on issues
arising.
New Decade - New Challenges
Annual Conference September 2010
Implications of move to contracts
focus
Contract = substantial advance, treatment
plant Civil, Treatment plant M&E, Treatment
Plant DBO, Network Civil, Network M&E,
Pumping contracts (Circular L6/09 para. 6)
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Approved Budgets
Application of Water Pricing
Planning of Projects
Programme/Project Management
Annual Review
Approved Budgets
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Planning stage:– budget covers cost to approval of
PR and share of water pricing to be recouped from
subsequent contracts;
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Construction/Procurement:- budget details at two
levels
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Scheme ( or phase of scheme) level
Contract level reflecting both relevant contract & noncontract costs - water pricing will apply at this level (on
bottom line basis)
WebPCS being adjusted to allow for these changes
New Decade - New Challenges
Annual Conference September 2010
Project financing – water pricing
application to contracts
Scheme Stage
Planning stage
Approved
Cost
Water pricing WSA share (20%)
€2m
Approved Grant
Cumulative share
of costs borne by
Dept at end of
each stage.
€2m (with €0.4m to
be recouped over the
procurement/
construction phase)
100%
(€18m)
Apportionment of
planning
costs
across contracts
(pro-rata share)
Application of 20% to
contract cost & pro-rata
share of planning costs
Contract 1 (including noncontract costs)
€2m
€0.222m
€0.444m
€1.556m
89%
Contract 2 (including noncontract costs)
€7m
€.0.778m
€1.556m
€5.444m
82%
Contract 3* (including
non-contract costs)
€4m
€0.444m
€0.889m
€3.111m
81%
Contract 4* (including
non-contract costs)
€3m
€0.333m
€0.667m
€2.333m
80%
Contract 5* (including
non-contract costs)
€2m
€0.222m
€0.444m
€1.556m
80%
Total
€20m
€16m
(80%)
Procurement/
Construction stage
* Construction post 2012 – illustrative example from Circular L4/10
New Decade - New Challenges
Annual Conference September 2010
Planning
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Preliminary report
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Critical appraisal tool – determining scale, scope and phasing
of project;
Need broad vision to guide the incremental approach
Set in River Basin Management Plan context – need to look at
opportunities for cross boundary synergies/economies of
scale,
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Reduce the need for “design reviews”
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Aim - to have appropriate contracts ready to go for
next investment cycle.
New Decade - New Challenges
Annual Conference September 2010
Programme/project management
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Driving the programme
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Need to use the “project steering group” meetings
as “programme steering groups” to drive local
programmes;
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Determine key milestones at project level and
monitor any slippage and address;
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Be guided in implementation by WSIP priorities –
quality, compliance and economic recovery;
Project management staff
New Decade - New Challenges
Annual Conference September 2010
Annual Review
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Review progress at end of each year of
operation to allow for re-prioritisation;
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Review in line with programme priorities but
will take account of new issues emerging –
Remedial Action List (RAL), licensing/
certification etc
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RAL – call for proposals in Summer 2010 for
small scheme funding.
Implementation - Future Trends
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VFM study
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Review of WSIP 2007-2009 with outcome to inform
implementation of WSIP 2010-2012;
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Due to be finalised in Autumn;
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Steering group involving D/Finance and CCMA;
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Terms of Reference to look at efficiency and
effectiveness of overall investment & project
delivery;
New Decade - New Challenges
Annual Conference September 2010
Implementation - Future Trends
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Project scale 
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Use of small schemes funding to complement
overall priorities
Bundling and DBO :
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“continued use of DBO” – Local Government Efficiency
Review Group recommendation;
Consideration of bundling projects based on common
compliance considerations as well as geographical
proximity.
Clarity on overall strategy and contribution of
individual contracts to delivering on outcomes
New Decade - New Challenges
Annual Conference September 2010
Economies of scale – waste water
DBOs
Wastewater DBO Contracts - DB Cost per PE
1600.00
1400.00
1382.19
1334.37
Cost per PE, €
1200.00
1000.00
889.61
800.00
28,000, 628.23
660.47
600.00
556.61
3,500, 493.99
3,600, 461.67
3,000, 428.27
400.00
65,000, 470.48
447.61
334.24
200.00
0.00
0
10,000
20,000
30,000
40,000
Population Equivalent, PE
New Decade - New Challenges
Annual Conference September 2010
50,000
60,000
70,000
Economies of scale –water DBOs
Water DBO Contracts - DB Cost per Ml
2,500,000
2; 1,886,230
Cost per Ml, €
2,000,000
1,500,000
15; 1,103,318
1,000,000
8; 1,018,501
31; 793,653
18; 461,062
500,000
87; 309,246
0
0
10
20
30
40
50
60
70
Daily Water Production in Megalitres per day, Ml/d
New Decade - New Challenges
Annual Conference September 2010
80
90
100
Implementation - Future Trends
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Performance measurement
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Greater definition of outcomes expected rather than output only - eg
number of schemes/contracts completed
Shared services
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Potential being considered in VFM study drawing from existing
examples;
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Governance issues being considered in context of implementation of
River Basin Management Plans
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Local Government Efficiency Review Group recommended –
“enhanced regional office approach should be developed at river
basin level for: - infrastructure delivery and implementation of river
basin management plans…..”
New Decade - New Challenges
Annual Conference September 2010
Conclusion
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Substantial Exchequer resources available over the
coming years;
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Opportunity to make major impact on water
services infrastructure;
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Priorities have been set;
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Need to demonstrate success in terms of improved
compliance, water conservation and security of
supply if projected funding level is to be maintained.
New Decade - New Challenges
Annual Conference September 2010