Case Studies

Thames Water

Thames Water is the UK’s largest water and wastewater service company. It supplies 9 million water and 14 million wastewater customers across London and the Thames Valley. It manages 32,000 km of water mains, 12,000 km of Trunk Mains, 108,000 km of sewers, 100 water treatment works and 350 sewage treatment works.

Thames Water have used AIM to optimise over £30 billion capital value of assets to determine their 40 year investment plan submitted to the UK regulator OFWAT. AIM gives Thames Water the control and ability to run unlimited scenarios in-house to determine optimal investment plans. This has resulted in running hundreds of scenarios with multiple customer service and budget constraints in a short period of time. AIM is now fully embedded within asset and investment planning team and is being used as business as usual to not only set the strategic plan but also inform the programme of delivery in a cyclic manner.

Thames WaterThames Water is Probit’s first client and is using AIM for water and sewer pipe assets to quantify the investment required to achieve levels of service for customers.This feeds into their five-year planning cycle, in which proposals are submitted to their regulator, Ofwat, to determine the investment companies can make and future bill limits for customers.

Asset Investment Manager has also been used for water resource management planning to identify how Thames Water will maintain water supplies over a 25 year period.The complexity and size of Thames Water greatly benefits the development of AIM, which all our clients ultimately benefit from as well.

A Journey
Adopting AIM within a business as an investment planning tool is a journey. AIM allows a transparent and step by step progression from simple to complex asset management in a time frame that reflects the maturity required.

For Thames Water, the journey started by replicating their existing investment planning approach within AIM. This quickly demonstrated the speed and value of AIM and allowed for staff to quickly learn how to set up and run their own investment scenarios by themselves. Training sessions were also provided to get new users up to speed.
The next step in the journey involved enhancing existing and developing new approaches to determining asset risk and investment requirements.

The final step in the journey involved Thames embedding AIM within their asset planning process and building an in-house team around it.
Throughout the journey, we worked with Thames Water to help them get the most value out of using AIM at each step.

Asset Level Modelling
Robust statistical models were developed to predict asset performance and consequence of failure at asset level. A step by step approach was adopted that involved updating any existing models with the latest data and expanding the models to include additional predictor variables.

A variety of standard statistical techniques based on an understanding of the assets, their underlying failure process and the data that was available, to produce burst rates, leakage and deterioration models.

Consequence models covering interruptions to supply, low pressure and customer complaints were developed based on
consequence data and pipe characteristics.

Risk Map
All analysis and resulting models were undertaken at pipe level and incorporated within an AIM Risk Map. This framework links pipe level performance and deterioration, with downstream consequence and service drivers. This creates a cause and effect and effect relationship between asset performance and service delivered to the customers.

Interventions and Costs
The Risk Map was populated with several interventions and costs including asset replacement and repeat interventions, such as cleaning.

Optimised Plan
AIM has allowed Thames Water to ask and answer investment decisions in hours that previously took months. Using AIM’s powerful and fast optimisation engine Thames have been able to run 100’s of scenarios at asset level with varying objectives and multiple constraints.

A key scenario for Thames is to hold all network performance and customer service drivers’ constant over a fixed time interval. This is then used to compare other potential scenarios.
Each scenario generates a plan of investment at asset level and the final chosen scenario is used as a basis for their 5 year delivery programme.

South West Water

South West Water provides water and sewerage services across the south west of the UK,
in Devon, Cornwall and parts of Dorset and Somerset. Two million residents and eight million tourists rely on them to deliver a safe and clean water supply and keep the region’s beaches and sewerage systems in line with stringent UK and European Union standards. Their assets include 29 water treatment works, 645 waste water treatment works, 1,001 combined sewer overflows, 1,111 water and sewage pumping stations, 15,000 km of water mains and 14,000 km of sewers.

South West Water are utilising AIM for their extensive above ground assets, water treatment works, sewage treatment works, pumping stations, and reservoirs, to inform the level of investment required to maintain and improve water quality, minimise and prevent taste, odour and discolouration and ensure waste water leaving treatment works is no threat to the environment.

Sout West WaterThe challenge the UK water regulator Ofwat put to all water and wastewater companies was to understand their
customers’ needs and wants and reflect these in their business plans.
SWW was one of two UK water companies fast-tracked by OFWAT through its 2014 price review for the next regulatory period. Ofwat Chief Regulation Officer Sonia Brown said:

“The plans submitted by South West Water and Affinity Water stand out. These companies have achieved plans of particularly high quality, with a consistent focus on listening and responding to what their customers want.”

Equipment Modelling
Equipment failure models were developed for all equipment items and were validated and calibrated using engineering knowledge to ensure that the predicted results
were credible and intuitive to the business.

System Reliability
To appreciate the relative importance of equipment failures, the business needed to understand how they ultimately impact upon the service delivered to customers and other stakeholders. To do this required an understanding of how equipment items perform together as a system and how equipment failures impact upon the availability of the process within which they operate (e.g. levels of redundancy). Reliability block diagrams (RBDs) were built for each process in order to achieve this.

The unavailability of different processes can impact upon different types of service and to differing extents. Service impact modelling provided an elicited, rules based approach for articulating the service impacts associated which the unavailability of each process type, i.e. likelihood and size of the service impact.
In calculating the type and extent of the service impact associated with the unavailability of a process, the time to restore the process to working order, the time it would take to experience a service failure and the availability of an alternative to the unavailable process were all taken into consideration.

Risk Drivers
South West Water talked extensively to their customers to ascertain what levels of service really mattered to them.
Results from these surveys were then used as risk nodes within AIM, where each risk node represents a service that an asset provides.

Economic Framework
To derive costs and benefits of investment the various components, equipment failure, system reliability and service were brought together in an economic model.
This was done using a risk map, where the relationships between the assets, their propensity to fail, the impact of those failures on service, and the cost and value associated with those failures are represented in an intuitive and graphical manner.

Optimising Investment
AIM provided the basis for understanding how much the asset base would cost to own over a 40 year planning period and how service would change both in terms of dealing on a purely reactive basis and understanding the cost and benefits associated with being proactive in the way the asset base is managed.
Various scenarios were generated to optimise investment to meet multiple customer service requirements and submitted as part of the regulatory investment submission.
The ability to link assets to service to customers in a transparent and repeatable manner resulted in the investment plan being fast tracked by the regulator. Delivering service for less resulted in more value for customers and shareholders.

UK Gas Distribution Networks

AIM was used to help develop and implement a common methodology which will be used by all Gas Distribution Networks (GDNs) in the UK to assess the health, criticality and associated Risk Value of network assets to meet special license condition 4G (Methodology for Network Output Measures) as part of RIIO-GD1. A team of AIM consultants assisted the GDNs in presenting the new framework to OFGEM, who are now adopting this methodology to justify strategic investment totalling approximately £14 billion in the next regulatory cycle GD2.

Initially each of the risk components, probability, consequence, and cost, as well as the related models were combined and defined in AIM by AIM users. This AIM configuration was then used to forecast future asset performance, risks, and cost of ownership with proposed investment plans and without. The concept of the AIM riskmap (the foundation of our application) was proven especially useful in helping to understand and define asset risk by all involved.